Canada Modernizes Copyright Legislation

Copyright reform in Canada has, after a decade of effort, finally moved towards implementation. On November 7, 2012, pursuant to an Order in Council, many provisions of the Copyright Modernization Act, SC 2012, c 20, came into force. Several other important provisions under the law, including the new Notice-and-Notice rules and provisions aimed at bringing Canada under the umbrella of two World Intellectual Property Organization (WIPO) treaties, will come into force at a later date.

The purpose of the Act is to modernize existing copyright legislation to account for the environment created due to the Internet and to align with the international standards contained in two WIPO treaties. The Act also aims to enhance the ability of copyright owners in the protection of content, especially in the digital context, while seeking to balance the interests of society and users and their right to fair use of legitimately acquired copyrighted material. Some important changes in the Act are discussed below.

Internet Service Providers

The Act clarifies that Internet Service Providers (ISPs) and search engines are exempt from liability under the Act when acting only as intermediaries in the communication of copyrighted works. An ISPs provision of Internet access or allowing users to download material that the user has personal control of will not amount to infringement as long as the ISP remains a conduit in that process. However, ISPs that knowingly facilitate copyright infringement may face criminal or civil penalties.

The Notice-and-Notice language in the Act, by contrast with the Notice-and-Take-Down regime in the US, provides for specific duties for Canadian ISPs when faced with allegations of hosting infringing content. This regime allows a copyright holder to inform an ISP that an ISP user may be infringing copyright. The ISP, in turn, must forward that notice to the user. Once the user has received notice pursuant to this system, their personal information may be released with a court order.

Updated Rights for Creators

The Act will bring Canadian copyright legislation in line with two WIPO Internet treaties, including giving all copyright owners a making available right. This right grants copyright holders certain control in how copyrighted material is released online. This provision is specifically aimed at the unauthorized sharing of works over peer-to-peer networks. Copyright owners can also look forward to distribution rights, which will allow the control of the first sale of every copy of their work.

The Act contains bolstered language regarding digital locks. Digital locks may be used by copyright holders to prevent unauthorized access or copying. The most controversial part of the legislation provides that, subject to very limited exceptions, it is illegal to circumvent or bypass digital locks used to prevent unauthorized access or copying of a work. A user's exercise of the fair dealing right is not an exception under this regime. It is also now illegal to manufacture, sell or distribute devices or software that is designed to break digital locks or offer services to do so.

Performers will now have moral rights in their performances, a right previously held only by authors. The term of protection under the Act has been extended for sound recordings for performers to 50 years following the publication of the performance, whereas under old legislation, the 50-year period began when a recording was made, rather than released.

Expanded User Rights

Reflecting that the copyright system seeks to balance between divergent policy needs of copyright owners and society and users, the Act provides clarity to legitimize certain everyday activities undertaken by consumers in a digital-age. Private non-commercial activities such as recording television to watch privately at an individual’s leisure; copying legitimately owned content, such as songs, to a personal music player or privately controlled computer storage; and backup copying and accessing of legally acquired software are, subject to some limitations, exempt from infringement and become user's rights.

The fair dealing exceptions are the most important of the user's rights and the purposes for which fair dealing may be conducted has been expanded to include satire, parody and education as fair uses of copyrighted materials along with research, private study and criticism.

In addition, the Act permits the use of legitimately acquired copyrighted material for users to create their own content. User generated mash-ups of clips of other works will constitute new works as long they are not for commercial purposes and do not prejudice the original copyright owner’s economic interests or moral rights.

Statutory Damages and Remedies

The Act changes the current statutory damages regime by introducing a distinction between statutory damages for private-use infringement and infringement for commercial purposes. Previously courts could award statutory damages of $500 to $20,000 per infringement, with no distinction made depending on the purpose of the infringement. The new Act significantly reduces possible statutory damages for individuals who infringe the Act for personal, non-commercial purposes. In such a case, the court may award between $100 and $5,000 in total damages. Infringement for commercial use carries the same range of fines ($500-$20,000 per infringement) as under the old legislation.

Conclusion

The Act entails important changes to the manner in which copyright law will be enforced in Canada. During the summer of 2012 the Supreme Court released five copyright decisions further defining the balance between the rights of copyright owners and users. With the coming into force of provisions of the Copyright Modernization Act, Parliament has added its voice and priorities to that effort to find the right balance for Canada. With many new provisions, all businesses should review their Internet-related activities in the context of the new Act and adjust practices into to find the best fit among these new provisions. Businesses should also continue to monitor the decisions of the Courts as the new provisions become further illuminated in the context of the likely litigation of many of the new rights.