Proceedings of the Standing Senate Committee on
Transport and
Communications
Issue 13 - Evidence
OTTAWA, Monday, April 14, 1997
The Standing Senate Committee on Transport and Communications, to which was referred Bill C-32, to amend the Copyright Act, met this day at 3:35 p.m. to give consideration to the bill.
Senator Lise Bacon (Chair) in the Chair.
[English]
The Chair: Honourable senators, with the appearance before us today of the Honourable Sheila Copps, Minister of Canadian Heritage, we embark upon a very intensive series of hearings. The Senate referred to our committee Bill C-32, an act to amend the Copyright Act, last Thursday.
To say the very least, there is considerable public interest in this bill. My office alone has received approximately 120 letters, and we are receiving more today on this bill. I am sure other members of the committee have had a similar experience.
It is my hope that the committee's consideration of Bill C-32 will live up to expectations and that we give a full and fair hearing to all major concerns in a timely fashion.
[Translation]
We shall be listening to submissions with an open mind. We are conscious of the various interests involved. We have a legislative timeframe that allows us to carry out a serious study. We shall be hearing from those on both sides of the issue; they will be given equal time.
It will be a process of education for each of the members of the committee. We shall be listening to witnesses with great interest, and we want to thank our excellent research personnel. We can count on the services of four highly qualified people to help us in the work we are undertaking today.
[English]
To this end, I have instructed committee staff to prepare a hearing schedule which is now before members for their consideration. You will note that both users and creators will have equal time before the committee. If members agree, we shall do our utmost to respect this schedule.
May I have a motion that the proposed hearing schedule be adopted, subject to necessary adjustments?
Senator Poulin: Madam Chair, I so move.
The Chair: Is it your pleasure, honourable senators, to adopt the motion?
Hon. Senators: Agreed.
Senator Forrestall: Madam Chair, I should like to make an observation.
The notice of today's meeting did not arrive in my office until 5:30 p.m. Friday afternoon. Were it not for an earlier meeting of the subcommittee of our committee, Madam Chair, I would not have known that this meeting was taking place.
Is 5:30 Friday afternoon an appropriate time to send a notice to anyone's office about anything that will happen here on Monday? On reflection, Madam Chair, you may agree with me that that is not very useful.
The Chair: Senator Forrestall, I asked that you be informed prior to that.
Senator Forrestall: The notice comes from the Committees Directorate.
The Chair: I will get the proper information and let you know.
[Translation]
The Honourable Sheila Copps, Minister of Canadian Heritage: I want to thank you, Madam Chair, as well as the Transport Committee for having undertaken this work which is not only important, but --
[English]
-- a depth which will, obviously, require your full and careful attention.
I am also pleased to see two former colleagues of the House of Commons here. Many people think that, in politics, we are always fighting each other. The fact is that, in our past lives, Senator Forrestall and I actually shared a parliamentary assistant. Unfortunately, that parliamentary assistant, who started off with the Young Conservatives in Ontario, before coming to work for me, eventually became a Young Liberal, and is now sitting in the Parliament of Canada.
It is nice to see Senator Forrestall and Senator Maheu, with whom I worked for so many years.
It is my honour today to speak to a matter which, I believe, is important to the security and the health of Canada and our culture. Bill C-32, which passed in the House of Commons three weeks ago, is a much needed modernization of the Copyright Act. It is a crucial bill. I believe it is one of the most crucial bills to be placed before Parliament in recent years dealing with the very important issue of culture. It is a modernization of the Copyright Act; and it encompasses the work of many ministers before me.
I did not dream up the Copyright Act in January of last year. In fact, it started with the imprint of the culture minister of a different political stripe, the Honourable Flora MacDonald, who initiated the process of modernizing the Copyright Act with phase one back in 1988. As a member of the opposition at that time, I remember working with various groups to ensure that the bill was improved. I recall how receptive Ms MacDonald was to changes that were necessary to make the initial legislation in its final draft form work.
[Translation]
Few bills before Parliament have had more multi-party input and more bipartisan origins than this one, making it the fairest and most balanced piece of framework copyright legislation that the House could possibly have sent to the Senate. I am gratified that there are people on this committee whose tremendous knowledge and experience in the cultural sphere will now be called upon to bring Canada's copyright legislation into the 21st century.
We are glad that we shall be able to count on the experience of the chair of your committee, Senator Lise Bacon, who has been Minister of Cultural Affairs in Quebec, as well as Senator Poulin, who has worked for the CBC and who was founder and director of French services for Northern Ontario, as well as those of Senator Gigantès, who was once Minister of Culture in Greece.
[English]
The vast experience of other ministers, both directly and indirectly, is well known.
The experience of Senator Johnson and her passion for culture and the arts are well known. I am also aware of her profound and longstanding commitment to protecting Canada's book distribution system for our book publishers. I am delighted that many of her concerns are reflected in Bill C-32 with key provisions to safeguard Canadian distributors.
[Translation]
Canada's cultural community, our artists, performers and creators are looking to you to bring nearly 10 years of hard work to fruition.
Bill C-32 is an honest attempt to strike a balance between the creators' rights and the need to make their works accessible to as wide an audience as possible. It is a better and fairer deal for our artists and producers. A better and fairer deal for our book distributors.
It is a bill that respects the special needs of our public institutions and Canadians with visual and hearing disabilities. It says that at a time of globalization and information explosion, copyright reform is a real and important part of maintaining our identity and our place in this world.
[English]
Suffice it to say that, to make this bill work, many people have had to put water in their wine. Senators will hear from certain groups and individuals who will say that this bill does not do enough and from others who say it does too much.
For those of you who urge changes, remember that each change could be akin to pulling a thread from a very fine tapestry. The legislation is the result of years of negotiation and compromise. Frankly, there are some areas in which I would have liked to do more, but, as legislators with a stewardship responsibility to our artists and to culture, we also have the responsibility to move ahead with legislation that is realistic and workable.
That is why I believe that Bill C-32 reaches a fair and honourable compromise. It reaches a fair and honourable compromise with broadcasters and small radio stations. Two-thirds of all the stations in Canada, all those with revenues under $1.25 million, will pay a nominal $100 annual fee for neighbouring rights into infinity.
As a result of the presentations that were made to us at committee stage, an ephemeral recording exception has also been included in the bill addressing a major concern that would emerge when broadcasters are broadcasting events like sporting competitions or telethons.
[Translation]
As for educational institutions, Bill C-32 provides another set of compromise exceptions, which did not exist in the beginning, in 1988. Teachers will now be allowed to copy news or news commentary programming for use in the classroom. Libraries will be permitted to use digital technology to send material to other libraries. And archives will be able to make copies of certain unpublished works.
These are exceptions which educational institutions, libraries and archives did not have prior to Bill C-32.
We all gave some ground in order to bring Bill C-32 this far. Some people will say that we have made too many concessions, like Margaret Atwood herself who does not want any exceptions. As an author, her work is directly concerned.
Others will say that we have made too few exceptions. But this is the burden of achieving the widest possible consensus on a very complex and sensitive matter.
[English]
Honourable senators, Bill C-32 is about culture. It is also about creating jobs for Canadians and strengthening the very instruments that allow us to tell our nation's story.
I read Senator Johnson's speech to the Senate on the capacity of governments and the role which governments have played in permitting Canadians to tell their story over the last number of decades. She is bang on. Governments do have a role to play by way of legislation and regulation and by way of creating a framework. It does not always mean only dollars. Almost 1 million Canadian jobs depend on the cultural sector. It represents 5 per cent of our gross domestic product.
Over the last five years, the growth in the cultural sector has outstripped that of the economy as a whole. At a time when we are looking for that key to getting young people to work in value-added jobs, let us take a look at a sector which has had a greater level of success over the last five or ten years than any other sector. That is the cultural sector.
This success did not happen on its own. It took talent. It took millions of Canadians who wanted to read, hear and see Canadian stories. It also took successive Canadian governments standing behind Canadian artists.
Senator Johnson told the Senate something on October 21 of last year which, I think, differentiates us from the position taken by our neighbours to the south. She said:
In Canada, it is important to recognize that culture is not just a business... As legislators, we must ensure that government policy reflects the special role of culture in our society.
It is our responsibility to help our artists show Canada and the world what they can create. Copyright protection -- in effect, property rights for creators -- is a crucial part of that responsibility. Copyright means protecting people's creative work. It means that creators have the right to be paid when their work is used for commercial purposes.
According to Statistics Canada, the average Canadian musician is among the lowest paid in the economy, earning approximately $13,000 per year. Bill C-32 will improve this situation. We can make sure that Canada's creators are paid for the work that they create, that their intellectual property is respected, and that their contribution to Canadian society is underscored by legislation.
[Translation]
And while I have been around long enough to know that Bill C-32 is not the type of legislation on which governments rise or fall, I also know that it is the kind of legislation that can truly buttress the solid functioning of our country -- over the long term, not just tomorrow or next week -- and ensure a firm foundation for all our cultural endeavours.
For nearly 10 years, artists have awaited Phase II of the copyright reform. Before that, they waited over 60 years for the process of reform to begin. Moreover, last December, the global community, through the World Intellectual Property Organization, concluded two new important world treaties: the Copyright Treaty and the Performances and Phonograms Treaty.
Unfortunately, Canada has not ratified those treaties partly because our current copyright legislation is so out of date -- so out of date that we are not even a signatory to the Rome Convention on neighbouring rights concluded in 1961!
The bill will fix that. Canada will finally be in a position to join the world community as a full respecter of copyright protection. We will -- at last -- join more than 50 countries who have already recognized neighbouring rights and signed the Rome Convention.
[English]
The advent of new technologies is creating a need for more copyright renewal. While today we are dealing with photocopiers and audio cassettes, in the future we must deal with Internet and CD ROMs and pressing issues related to the digital agenda.
Honourable senators, our culture defines who we are. It is also what makes us unique in the world. This bill will strengthen our capacity to make cultural expression and to benefit from that expression.
This legislation is a long time in coming. It arrives before you as the progeny of a process that started long before our government ever came into office. It has the endorsement of the official opposition in the House of Commons.
[Translation]
With so much partisanship set aside, one has to wonder why it has taken so long for this bill to get here when everyone understands the importance of this legislation, and everyone knows we need it in a modern world. Yet this delicate process has been derailed time and again.
I trust you feel, as I do, that we cannot allow nearly ten years of genuine effort to be lost. We must seize this opportunity to pass framework copyright legislation which serves the national interest.
I truly believe that Bill C-32 will mean a better life for thousands of Canadian artists. I hope it merits your support and approval.
[English]
The Chair: Minister, would you introduce the people with you, please?
Ms Copps: Yes. Susan Katz, Director General for Culture and Industries has probably done most of the on-the-ground work. Ms Katz was involved in this area before many of us, and I am sure that she will outlive most of us in it.
Also with me are René Bouchard, Director of Copyright, who is a lawyer. Jeffery Richstone is counsel from the Department of Justice who works specifically on copyright issues for the Department of Heritage. Danielle Bouvet is the Director for Intellectual Property from the policy shop of Industry Canada.
To my immediate left is the Assistant Deputy Minister for Cultural Development who oversaw the whole operation, Victor Rabinovitch.
[Translation]
In the House of Commons, more than 125 amendments were made to Bill C-32. According to certain detractors, the bill no longer strikes a balance between creators and users. Are you in agreement with this criticism? Which changes have provoked this criticism, which is in fact continuing?
In your opinion, should copyright legislation try to strike a balance between the interests of creators and users?
[English]
Ms Copps: The question essentially frames the entire debate we have engaged in over the course of the work of my predecessors; Michel Dupuis, with Minister for Industry John Manley and his predecessors, up to and including Flora MacDonald. There are two areas of debate, and you have touched on them.
One area is in how we have approached the problem of not only neighbouring rights or performers' and producers' rights, but also the aspect of balancing the role of the artist being broadcast on radio with the cost to the broadcasting industry. The second area is in the exceptions that have been brought to the 1988 legislation as it relates to giving public institutions the right to reproduce material without paying copyright.
We have worked at finding the middle path. Margaret Atwood spoke out vehemently against the exceptions, and my understanding is that her organization still feels that any exception is theft. They believe that when they create a work, it becomes their work, and the right to reproduce it, just like any other right, should be compensated. At the time, quite a few libraries said that we would have many of lawsuits. Since 1988, we have had no lawsuits dealing with copying.
By specifying in this bill exemptions that were not present in the 1988 bill, we have attempted to frame the conditions under which you can reproduce material for the public interest and not have to pay for it. In a sense, it is refining some of the concerns and fears that public institutions had in 1988. Naturally, since 1988, some institutions which have been negotiating with organizations like CANCOPY for licensed collective copying for artists are having to pay some money. They would argue that if you have a book, you want it to be circulated to the largest number of people possible without having to worry about copyright.
You need only reflect on the view of artists who say that if they produce a work, it is their work, and if a teacher wants to reproduce it for purposes of an exam, there is a way for them to licence that by collectives. They liken it to infrastructure work on a university. When an electrician fixes the wiring, you do not expect the electrician to do that work for nothing. They believe that neither should artists be expected to work for nothing.
We did not take the position of either side. We took the middle ground, saying there should be some exceptions. These prescribe the exceptions, and we think it is a good balance.
[Translation]
Senator Grimard: Madam Minister, thank you very much for your presentation. I know that the topic you have discussed is a delicate one, as abortion was under the Conservatives, or gun control legislation under the Liberals.
You mentioned several senators by name earlier, members of the committee. Of course you did not know me, and so you did not mention my name. I am not a "nobody," as Mr. Trudeau said in referring to members, when they leave Parliament Hill. I am from Rouyn-Noranda.
Ms Copps: You're talking about members of Parliament.
Senator Grimard: It could also have applied to senators. I wanted to introduce myself because you did not seem to know me. I hail from Rouyn-Noranda, a rural riding. I would have a few questions to put to you.
As far as royalties on cassettes are concerned, my researcher was present at the committee, and we are told that there would be an increase in the cost of cassettes of approximately 35 to 37 cents. My first question is the following: Does the increase take the cost of the cassette into account? Thirty-seven cents on a dollar cassette represents 37 per cent, but on a cassette of 3, 5 or 6 dollars, the proportional increase is much less. Why this gap in prices?
Ms Copps: The gap between the 37 cents and the cost of the cassette as such?
Senator Grimard: The Commons committee was told that there would be a 35-cent increase, approximately, in the cost of a blank tape. Some cassettes cost a dollar, others cost three, five or six dollars. Why?
Ms Copps: Why is there this spread in the cost of one, two, three or four dollars?
Senator Grimard: Why will the increase be 37 cents in every case?
Ms Copps: The royalty as such will be set by the Copyright Board. It won't necessarily be 35 or 37 cents. When we looked at everything that is done throughout the world by countries who have roughly similar volume, the figures ranged between 25 and 35 cents. It depends on the royalty that will be proposed.
The reason the price is the same is that this is not linked to the quality of the recording but to the decision to record another cassette, which is not a legal act, and to make it legal through this royalty that will be given to artists. The amount of 25 to 35 cents refers to the right to copy artists' works, rather than to the technical quality of the cassettes.
Senator Grimard: Madam Minister, I find it unfair that royalties of 30 cents will be levied for dollar cassettes and that the same amount will be levied for 3, 4, or 5-dollar cassettes. Why this divergence?
Ms Copps: Normally, if it were a tax on a cassette, there would be a set amount. For instance, if the cassette cost $1 and there were an 8 per-cent tax, you would pay less. In this case, the Copyright Board will analyze what has been done in other countries with similar legislation and they will also listen to those who record artists. They will then suggest a royalty for those same artists. This is not linked to the commercial cost of the cassette but to the fact that according to studies, out of 44 million cassettes sold in Canada, 39 million are used to steal the artists' work. We want to correct that situation. Finally, this will be brought into line with legislation, as copying is illegal at this time, and afterwards, the funds will be given to the artists, just as authors receive money in the case of books. I know Rouyn-Noranda well, because my father is from Témiscamingue.
Senator Grimard: You were on the Ontario side, and I was on the Quebec side. We meet in the middle, however, because I am a federalist.
In another connection, Madam Minister, I would like to discuss the issue of used school books with you. Unless I am mistaken, an amendment was carried at the last minute at the last committee hearing. In my opinion, it will not have a positive financial impact since students might lose a few million for the purchase of their books, or some four million in purchasing them, and two million in reselling them.
I am also told, and this is the topic of my question, that on March 24, there was a meeting, Madam Minister, between student representatives and bookstore owners, and that a certain consensus was reached to the effect that if the used school books distributor did not increase his market the law would not be applied. My question is the following: do you not think that for those distributors, this is like a sword of Damocles hanging over their heads, since the decision rests with the goodwill of your department? They could be told: You are exaggerating, you now deal with seven, eight or ten universities when you used to deal with four or five, you have thus increased your market and we will apply the law.
Why this compromise, which effectively hangs this sword of Damocles over their heads?
Ms Copps: First, all of the amendments were submitted at the last minute because that is the process of the committee, and we heard approximately 60 witnesses and reviewed 190 briefs. The committee met to make proposals and afterwards the Department of Industry and Canadian Heritage were consulted. That is why amendments were submitted at the last minute. It does not mean that they were-last minute amendments, but the process allowed us to include them at the end of the debate.
When I was a student I bought a good part of my books from other students. That practice continues, and we have no problem with it. It may, however, be a more serious issue for English-language book than for French-language books. In French there aren't many school books that come from France because they cost too much.
For instance, let us say that Margaret Atwood signs an agreement with a distributor and tells him: you are my distributor of choice. All of her books are sold. Then, let's say, that she has another distributor in the United States.
[English]
There are two parts of this parallel import restriction that we have added on books. First, let us suppose that Margaret Atwood's book has not sold that well in the United States. Approximately 100,000 copies were ordered and, God forbid, they only sold 10,000. They have 90,000 sitting in a warehouse somewhere in Washington. Presently, there is nothing to prevent those books from being sold throughout Canada, even though Margaret Atwood has a commercial agreement with a Canadian publisher, who then obviously uses part of that sale money to reinvest in other Canadian authors and, in a sense, to provide the cultural basis for a Canadian book industry.
Some of you probably read today that Lester in Toronto has filed for protection. Last summer, Coach House Press went under. There are a number of Canadian publishers in difficult situations. Parallel book distribution was originally introduced to deal with the possibility of new books coming into Canada. This is why the regulatory process will be important in terms of how the legislation is carried out. That is fine for new books.
Let us take a similar situation. Let us say that Margaret Atwood was on a course list in 20 universities across Canada. At the end of the university year, people sold their books back to the universities. There is only one distributor in North America that deals with post-secondary textbooks. That distributor is located in the United States. Let us say that a whole bunch of books are sold back to that distributor at the end of the year. That distributor may have a licence to sell them back in Canada. Exclusivity of the contract stops after 90 days. At some point, you can bring the used books back into Canada. This is an attempt to prevent the dumping of books.
The bigger concern with regard to used university books is books coming in from the United States; medical books and others. We are concerned that used textbooks could become a back-door route for bringing American textbooks into the system. That is why we want to monitor it. In the future, parallel importation of used books would be dealt with by way of regulation.
I think it has been pointed out to the committee that that is good for new books, but that there is a growing market in used books. There is a concern because we have a population of only 30 million people while the Americans have 300 million people. If one book on an American university or college schedule is sold up, it would be very easy for it to come back and flood the Canadian market, thus bypassing our parallel importation laws for books to licensed Canadian distributors.
[Translation]
Senator Grimard: Madam Chair, I would have a last question which I think is the most important one. I had the privilege, Madam Minister, of meeting personally at least 15 representatives from all sectors, artists and book publishers. I perceived something which I would like you to confirm. Generally speaking -- without saying that everyone is satisfied -- I was told this: we are in favour of this bill and hope it will be adopted as is, even though we are not fully satisfied with it, because after numerous discussions which have been on going for a number of years, we feel we should arrive at a consensus which would at least be sufficient to allow us to discuss Phase III of the bill, which will be passed one day, sooner or later. I want you to tell me whether I am mistaken in my interpretation.
I find it very important that most of the parties concerned, even thought the 15 parties we met represent diverse fields of interest, said the following: don't say it too loudly, but we are satisfied. We have finally reached a consensus. Discussions have been on-going for seven years. Are you under the same impression, Madam Minister? I would go even further. If you are under the same impression, do you not think that the committee should suggest in its recommendations for Phase III that different topics which were not settled in a definite way by Phase II of Bill C-32 be taken into account? I would like to hear your comments in this regard.
Ms Copps: Firstly, you are absolutely right. You compared this bill to bills on abortion and gun control. I would say that it was even more difficult, because of the different interests involved. They were so many stakeholders, so many interests to conciliate.
There were more than 80 interested parties on the list. That being said, Phase II certainly makes certain amendments and improvements to Phase I. The concept of copyright itself is constantly evolving. Of course, in the world in which we live, with its new technologies, once we have completed Phase II, we will have to approach Phase III in light of even newer technology.
I don't want to give too many specific dates or other such details. Ms MacDonald wanted to move to Phase II in 1988. There were many people of goodwill involved, but there were so many stakeholders and consultations that it took almost a decade. You're quite right insofar as the bill as such is concerned. If I had been at liberty to draft my own bill, it would have been different. We struck a good balance. The fact that someone can create something which can be copied with no compensation for the creator reflects the reality of today's world, I think.
I agree with Margaret Atwood; if someone creates a work of art, it should be treated in the same way as all the other products of our society. However, a balance has to be struck. We want students and young people to be exposed to new ideas. That is why we understood the necessity of granting reproduction rights, for students, museums and cultural groups. This is the balanced approach that develops in a political arena.
Senator Grimard: To summarize, Madam, we agree that the bill is not perfect?
Ms Copps: Yes.
Senator Grimard: The bill does not satisfy all of the stakeholders fully, but, for once, this is definitely a step in the right direction, due to a consensus, to the fact that each party made concessions in their respective area.
Ms Copps: Will you be inviting me to Rouyn-Noranda soon?
Senator Grimard: You should ask your friends!
Ms Copps: It depends on the activities involved.
[English]
Senator Milne: Minister, my concerns about this bill are particularly with the field of archivists, libraries and researchers. I understand that the amendments you have brought in address many of the concerns of the Canadian Association of Archivists. What specifically has changed in the bill?
Ms Copps: The committee introduced a series of amendments to ensure that unpublished works have free-copying privileges, which was not the case in the first draft.
For example, when researching genealogy, you can copy baptismal records or synagogue records, or whatever, without worrying about copyright law. Such unintended by-products of the first draft were cleaned up in the second draft.
[Translation]
Mr. René Bouchard, Acting Director, Copyright Policy and Economic Planning, Canadian Heritage: It is very technical. In fact, there are two measures proposed in Bill C-32 to meet the needs of archives or of those who do research, particularly when unpublished material is involved.
We will allow copies to be made of the material after the Act comes into effect. Archives will be authorized to make copies of unpublished material.
The related measure concerns the period of time during which unpublished works will be protected.
In the past, there was no limit set on the duration of that protection. We have now limited it and have made it similar to the period that applies to published works, which means that works will be protected during the life of the author and for a period of 50 years after the author's death. This allows archivists and historians to make copies and to have access to material they did not have access to previously. This facilitates research and the transmission of historical information concerning heritage, but we continue to protect the creators, since their works are protected for a certain period of time.
Once again, a balance had to be struck to take the needs of users into account as well as the need to protect artists.
[English]
Senator Milne: My family donated my father's papers to the archives of the City of Toronto with the full expectation that they would be made publicly available for anyone who wanted to use them. That was the whole purpose of giving them to the archives.
I have used some of the material in those papers myself in genealogical books. Can people copy my books without having to ask permission? I do not want people to have to do that.
Ms Copps: You can make one copy of your family's works, in terms of the books that you have published. The exemption for the protection of unpublished work obviously does not cover books that are published, but if you have published a book and are not a member of a collective, anyone can copy your books without a problem.
Senator Milne: Could you explain that further?
Ms Copps: For example, I published a book. It is out of print now, but it is in libraries where people can read it, if they so wish. They can also copy it, because I am not a member of a collective of authors. Margaret Atwood is a member of such a collective, and the collective will negotiate with, for example, provincial governments to give a global right to copy, so that individuals do not have to negotiate with each college or university.
If you have published genealogical books that are being sold commercially, you can join the collective and the collective will negotiate with all the universities. If they want to copy your works, they pay a small fee for the collective copying right. If you are not a member of a collective, anyone can copy your book, as is the case with my book, because it is out of print and I am not making money from it.
Senator Milne: Mine are in exactly the same position.
Ms Copps: Therefore, it would not be a problem. Also, you can state in your book that anyone can copy the material at any time.
Senator Milne: In the future, I certainly will.
Does this bill give archivists freedom to copy works that are on non-acid-free paper and are rapidly deteriorating?
Ms Copps: Yes.
Senator Milne: Most of the books in our libraries will soon be falling apart.
Ms Copps: This does give them that freedom, and it came about by amendments recommended by the committee. There was concern raised not only about unpublished works but also about books that were physically deteriorating.
Senator Johnson: Welcome, Minister. This is a very exciting afternoon for me, as the person who has been leading the state of the inquiry into culture in the Senate. This is the biggest meeting we have had in the Senate regarding cultural policy in my seven years here. Perhaps you should come more often.
I think you should know that the Senate has been doing much work in this area. Many senators have spoken, very eloquently, and we are looking forward to working more closely with your committee in the house at some time. When our telecommunications committee examines culture, I hope we can call on you.
We have been waiting for this bill, as you know, for some time. I personally am very pleased that the government is ensuring that its policy reflects the special role of culture in our society. It is a personal crusade of mine on which I have been working for some time. This is a complex bill. I do not pretend to know every detail of it. It took 60 years before the government even got around to considering this in 1989.
On the cultural side, I feel this bill is on the right course and I am pleased that the government is giving increased attention to cultural policy.
Have you given any consideration to a government agency on the publishing side, like the Canada Council or Telefilm? This idea was presented to us in a committee hearing. It is the only area of cultural policy in Canada that does not have a home in our government side. I throw that out for your consideration at this time.
We have received protests about this bill from a group of writers in Canada as well as a letter from several distinguished French Canadian writers to the Prime Minister and to the cabinet. I will put it on the record today. They have asked for two amendments. The first is to provide that exceptions will not apply where work is available under a licence from a collective society; and the second is that we not eliminate entirely the longer protection now enjoyed by works that have not been published by the time the author dies.
You alluded to them. Could I ask you what you have told these people, just so that when they appear before us we will be prepared? Will this be dealt with in phase III? They have been lobbying very extensively, and they did ask for the amendment before the bill came to us. I respect what they are saying. I just wonder what you are saying to them.
Ms Copps: I too hope we can work together on some overarching issues on cultural policy. I know you have begun some work in that area, as has the standing committee in the House of Commons. One of the areas we would be interested in looking at is book publishing. I have had some preliminary discussions with Canadian book publishers. They are looking at different instruments of government perhaps to provide financial support or to make some changes to some of the loan guarantee programs that are currently in place. I am not sure that another institute or institution of government is the route to go, but certainly we are open to looking at anything we can do to reinforce the book industry. Parallel importation will assist in that.
I know that Margaret Atwood's feelings on this issue of balance are very strong. She made them very clear before the committee. It is pretty hard to argue with someone who says, "I create something, it belongs to me, and I should be paid if it is distributed." If you take that in its purest sense, any form of permission to copy is a violation of that property right. That is one of the reasons why, in the course of the discussions of the standing committee, there was an attempt made to narrow some of the exceptions. It was felt they were too broad and that the people who created the work were suffering as a result. Again, it is a question of balance. They are not happy because they would like to see no copying of any kind in any institution; public, non-profit or whatever. It is hard to argue with their argument. They say that in a classroom, you have to buy a chair and a desk which also contribute to a child's learning process. People do not expect you to get them for nothing. They expect to be paid for them. That is the very pure view of the artists.
On the other hand, there is a public interest issue of access to material. When we introduced the provisions for single copying for assignments and other things, it was with the intention of getting it out there to the public. I think their concern is more appropriate with regard to the digital transmission that we will be facing in the future. Ten years ago, it would have taken a lifetime to copy everyone's book. However, very soon there will be technology available which will allow us to do so almost instantaneously.
Artists are also concerned for the future, if the principle of "everyone can have one copy" is embraced. I think we have struck the right balance in this bill. It is clear that colleges and universities will say that they should have more access to free copying. I guess that is what the debate has been about pretty well throughout.
Senator Johnson: It is fair to say you had to make a decision on this, and that is where you came down on it?
Ms Copps: Yes. Ms Atwood made some very powerful statements to the House committee. The committee brought in some narrowing exemptions, precisely because of the concerns that were expressed. I think the original definition of the expression of what constituted an assignment was very broad, to the point where almost any work could be taken and put out almost anywhere. We have brought in some limiting wording to frame more tightly what constitutes an exemption. That was discussed with those interveners and amendments were introduced to deal with it.
Senator Johnson: Thank you very much. I look forward to the next phase.
The Chair: Senator Johnson, do you wish to table those letters as exhibits?
Senator Johnson: Yes, I do.
Senator Spivak: I wish to go back to what Senator Grimard raised about students and used school textbooks. My French is not bad, but I did not understand everything.
I have received many letters on this issue. I was led to understand that this clause would not be implemented for a while, but there is no intent to withdraw this at any time; is that correct?
Ms Copps: No.
Senator Spivak: You want to monitor how it is being implemented. Could you explain that a bit more? I understand your concern. Are you looking at dumping. How will you deal with it? What else can I say to the people who are writing these letters?
Ms Copps: Concerns were brought before the committee about the fact that this parallel import regime will provide greater respect for Canadian commercial agreements which are signed between authors and Canadian book distributors. They will in turn provide some stability and support for the Canadian book publishing industry, which can hopefully reinvest in other Canadian authors.
At committee, it was pointed out that that would work quite well and was fairly airtight for new books. However, used textbooks is a fairly lucrative market. What happens if people decide they can get around that market by collecting used books and bringing them into Canada in great numbers? The intention was to build in a regulation-making mechanism. It took from 1989 to 1997 for this process to reach fruition.
We intend to monitor the situation. We have told the Canadian Book Distributors Association, the Canadian Booksellers Association and other interveners that we do not intend to regulate this immediately, but we would like to keep an eye on it. If it does reach the stage where used books are being brought in to the extent that we cannot bring in new books, we have a way of dealing with it without reintroducing a third phase of copyright reform, which might take another number of years.
Senator Spivak: In other words, you might never implement this.
Ms Copps: That is right. At the moment, it is not a problem. It could be a problem in the future, or and we may never implement it.
Senator Spivak: Now it is clear to me.
Another problem, as mentioned by Senator Johnson, is that there is not enough publishing of Canadian textbooks. I know this is not germane to the bill, but what do you intend to do about that? That is the key question.
Ms Copps: It is absolutely. In fact, we had a meeting of Canadian culture ministers in Regina last October. By coincidence, a number of the ministers of culture also happened to be ministers of education. We were talking precisely about Canadian curriculum. We have been working on a project with the Canadian Council of Ministers of Education because, as you know, there is no federal counterpart in education. We have offered to act in a clearing-house capacity to make available more Canadiana materials than could be available through provincial ministers of education.
I met in Newfoundland with a fairly well-known Canadian author who is not, by our standards, publishing a large number of books. She has some great material that she would like to get into Canadian schools. In order for her to do that, she must go to every system. That becomes onerous and at some point she or her agent gives up. Canadian students should be reading her material and in many schools they are not, because we do not have a clearing house for Canadiana.
The CCME has asked us to work on a clearing-house project. They have some other ideas as well.
Most of the computers that IBM sells come with CD-ROMs of an American encyclopaedia, which is now the tool of use in many Canadian schools. I am sure that that encyclopaedia offers great information, but we must ensure that Canadians have a chance to learn the Canadian story.
Senator Spivak: It has been pointed out in our committee and other places that small publishing houses have created the flowering of Canadian literature. It is not a question merely of clearing houses but of the actual source. This cannot happen commercially because they cannot be successfully commercially. It must be subsidized by the government. How will we assist them?
Ms Copps: That is exactly the point of the woman I spoke of earlier who writes for a small Canadian book publishing company. She is a small player and her company is a small player. There is no way she can go to every minister of education in Canada to get her books on the school curriculum. If she can crack one or two, at least it will give her a chance.
The CCME has asked us to collaborate to see if there is a way of making the system more accessible. Instead of going to 10 different provinces with 10 different curricula, perhaps we can cross-reference to other parts of the country.
Senator Spivak: That is an excellent idea and I commend you for it, but unless the federal government -- which is the only government that can do this -- puts in enough money to support the small publishing companies, the whole superstructure of what we have in Canada will collapse. That is the key question.
This is a beginning step. I congratulate you on this bill, but we must go the next step.
Ms Copps: That was one of the reasons we tried to reinstate some of the money that had been cut in the original cuts to book publishers. We are looking at other instruments for financial assistance to book publishers, precisely because they are not a business like any other business. They need to be nurtured.
We did increase the limit for the public lending right to try to get it back to artists. I had a meeting with people from the PLRA. A very well-known French Canadian author told me point blank that she could not live unless she lectured.
People say that Céline Dion is making a fortune, but that other recognized artists cannot live off their artistry today because the returns are very low.
Senator Adams: Madam Minister, we have many artists in the Territories. Most of them are not published. Their art is being used in different places. For example, a couple of years ago Molson Brewery was doing a commercial in Tuktoyaktuk and using some Inuit art. After Bill C-32 is passed, will companies that use art have to compensate the artist? How will that work?
Ms Copps: I am not sure what Molsons did in Tuktoyaktuk. However, someone like Susan Aglukark, who is well known across the country for her music, stands to gain financially from this piece of legislation.
There are enhanced remedies in this bill. However, I did not totally understand your question.
Senator Adams: For example, consider the cover of the telephone book that we have in the Territories.
Ms Copps: I see what you mean, senator. The telephone company takes someone's art and reproduces it without giving credit or financial compensation.
In that regard, our lawyers tell me that there are improved remedies in this bill. Jeff Richstone can cite the proper section.
Mr. Jeffrey Richstone, Senior Counsel, Copyright Law Reform, Legal Services, Canadian Heritage, Department of Justice: Clauses 34 and 35 of the bill allow for increased protections for authors or owners of copyright. There is a new provision to simplify proceedings. At the moment, proceedings for copyright infringement are taken by way of action. There is a new provision which states that they can be simplified. That will reduce the costs for right holders to take proceedings more expeditiously. It will be cheaper and quicker.
There is a new provision that we borrowed from the United States legislation called statutory damages. At times, it is difficult to ascertain how much an infringement is worth. It costs a lot of money to present evidence before a court as to exactly how much it is worth. This measure provides a way for the court to arrive at a figure, keeping in mind the equities on both sides. It is a provision that has met with much success in the United States.
In certain circumstances, I think the question you raise could be dealt with through the remedies we have in this bill.
Senator Forrestall: I will deal with some concerns of a colleague of mine who is not here today to plead his own case. Should the lack of knowledge with respect to infringement not be a defence?
Mr. Richstone: Lack of knowledge is a defence. There are several provisions which state that lack of knowledge either reduces liability completely or reduces damages to a very small amount. In terms of parallel importation, there is a question of constructive knowledge where someone ought to know something. The courts have interpreted that to mean where a reasonably informed business person should know of a certain set of circumstances, that person cannot just close their eyes to it.
In certain cases we talk about reasonableness. In certain cases we talk about knowledge. In other cases, where it is pure innocence, there is a defence.
Ms Copps: There is a clause of this bill which deals with innocent infringement. Such a provision did not exist in the 1988 legislation. It was brought in precisely to deal with that concern.
Senator Forrestall: Minister, I appreciate your being here today. God in his heaven knows the difficulties that many people have gone through getting here.
Madam Chair, I inadvertently misled Senator Kinsella. I told him that to the best of my knowledge there would be no meeting of this committee on this subject-matter until tomorrow. I said that the committee was meeting today for the purpose of discussing aviation and transportation safety.
The Chair: Senator Forrestall, the notice of the meeting was sent by the clerk to the offices of all senators by fax at 5:25 p.m. on Thursday afternoon.
Senator Forrestall: Madam Chair, Thursday afternoon or Friday afternoon at 5:25 does not make very much difference. In any event, I made a mistake and now I must pay up.
Senator Kinsella has four concerns that arise out of his academic background and have to do with universities. I will put them as succinctly as I can.
First, he spoke generally about reversing some of the amendments in the heritage area. In his intervention on this bill in the Senate, he stated:
First, the original definition of the term "commercially available" should be restored. The Heritage Committee's change to the definition of this term undermines and effectively makes inoperable some of the educational and library exceptions in the bill.
Second, the new restriction on the importation of used textbooks, to which Senator Grimard has alluded, should be deleted from the bill. This provision, in effect, places a tax on learning and deprives students of access to affordable learning materials at a time when increasing student debt is becoming a serious public concern. If the government wishes to support Canadian textbook publishers, it should not be doing so on the backs of Canadian students.
Third, the provision which exempts educational institutions and libraries from liability for self-serve photocopying machines located on their premises should be restored to its original form when Bill C-32 was first tabled in the other place.
If my memory serves me correctly, that had to do with the posting of a cautionary sign.
Fourth, the off-air taping exception should also be returned to its original form to allow the copying of documentaries for performance in the classroom....
Finally, there is one key area, the proposed new statutory damages regime, in which Bill C-32 should have been amended by the committee of the other place but was not. As the bill stands, the statutory damages regime can lead to the payment of damages --
This is what I was getting into a bit earlier.
-- even if a person had no knowledge that the activity in question infringed copyright.
In other words, if there was no intent.
Could you respond to some of the concerns expressed by Senator Kinsella when he spoke at second reading on this bill?
Ms Copps: In terms of the commercially available extension, that follows the question raised by Senator Milne about whether people's work can be made available or be protected. Again, it was a position of balance being sought by the artists. There are a number of books sold in bookstores. There are also books commercially available through collectives, once they finish their run at the bookstore, et cetera. That still means that that work has a copyright value to the artist. The commercially available extension was made to include works that are available through means such as collectives to ensure that if Margaret Atwood's book, for example, was out of the library but available in the collective, and if that work was used for purposes of reproduction, she should be paid for that. It is the principle of recognizing the intellectual property of the person who created the work.
There are a significant number of exceptions to that, which is why if you are not a member of a collective your work can be copied, or why your work can be copied under certain circumstances for educational purposes.
Over the course of the hearings artists identified some limitations as being too broad. We narrowed them, but we certainly did not eliminate them.
On used textbooks, people appreciate that someone who is commercially licensed to sell a certain book in Canada could be undercut in that commercial contract by someone from New York who brings in a shipload of the books and sells them on their behalf. The first concern obviously is for new books. Used textbook distribution is only done in the United States. There is no wholesale used textbook distributor in Canada.
Let us suppose that the University of Toronto buys up used books from its students and ships them back to the United States. We did not want to create a situation where the new book regime was circumvented by used books being brought in after having been warehoused in the United States, so we brought in regulations saying that we will not do anything now but we will monitor the situation. People do buy and sell books and we certainly do not intend to get into that aspect, but if it turns out that used books are coming in as a way of bypassing the parallel book regime, we want to have the ability to act.
There is specific legislation for libraries. For example, the library at the University of Ottawa, as part of the AUCC, negotiated a collective agreement with CANCOPY. Anyone can go into that library and make copies without fear of retribution. The bill also deals with innocent infringement, and of course the matter can be dealt with under general common law.
In 1988, when the original legislation was introduced, we were asking the same kinds of questions in reverse. People said there would be all kinds of lawsuits. There has never been a lawsuit in Canada dealing with copyright violation by photocopying. This bill actually makes the situation safer for the institutions, not less safe.
You asked about library self-service. The committee heard that simply posting a notice may not be sufficient if no effort was made to negotiate a collective agreement.
I believe that Mr. Richstone dealt with the statement of damages on liability in answer to a previous question.
Senator Forrestall: I have been fascinated with statutory language for years. Every time we create a word and that word finds its way into a statute or law, it becomes a nuisance. Any word which has no interpretation and which cannot be understood has no place in statutory law. If such a word is used, an explanation of what it means should be included.
I refer to the word "reprographic." I will not get into the roots of that word -- and, believe me, I understand what it means -- but that is not appropriate language for a statute of law.
Mr. Richstone: The words "reprographic reproduction" come up in the legislation of a number of Commonwealth countries, such as the U.K., New Zealand and Australia. There are models out there from which we drew when drafting this bill. There is a body of statute law that uses the term. Since much of the Canadian copyright legislation is inspired by Commonwealth legislation, we looked at that.
Senator Forrestall: Could you give us a Canadian definition?
Mr. Richstone: As I understand it, the term refers to photocopying processes, not the digital ones but the ones we know today which are basically analogue photocopying processes.
Senator Forrestall: I started a few moments ago to ask whether are we ready to cope with this infernal net or web or whatever we call it. In the next phase, will we deal with high technology and copyright law?
Ms Copps: Obviously, any future copyright law must deal with some of those issues. I do not want to say that it will exactly do this or that because the last phase was brought in with an intention to move immediately to phase two in certain other areas. Obviously, with the amount of work involved, this will take some time.
Much of the terminology is just emerging. They have tried to find words that mean the same things to legal beagles in other parts of the world so that we can match legislation.
Senator Forrestall: I am not criticizing that. It is a good idea, but I do not like using statute law as a place to develop the English language.
Ms Copps: I agree.
Senator Forrestall: We are talking about Canadian language. We use Canadian spellings nowadays.
Ms Copps: That is why we need proper Canadian textbooks -- so we can develop our own Canadian English, instead of using American English.
Senator Forrestall: I would not disagree. Minister, thank you very much.
Senator Milne: I notice that, where an archive requires the consent of the copyright owner to copy an unpublished work deposited in the archive earlier, the archive may copy the work in accordance with subsection 3 if they are unable to locate the owner. How assiduously must they chase down the owners of copyright 50 years after someone has died?
Ms Copps: Obviously, they must make a reasonable effort, but what constitutes "reasonable effort"? Fifty years after someone has died, it goes into the public domain anyway.
If someone is seeking out unpublished work from an author on a fairly consistent basis, it may be because they also have a value and people can track them down or whatever.
Senator Milne: That is a non-answer.
Ms Copps: Take the case of a writer who has written extensively but who also has unpublished work. You are taking work from that. The examples you are giving are fairly unique to genealogy. We did try, precisely because of the questions brought forward by the genealogical institute, amongst others, to improve the language in the original legislation because we did think it was too onerous.
We have built in a number of safeguards to permit people to continue genealogical and archival work without being compromised.
[Translation]
Senator Poulin: Madam Minister, we would like to congratulate you, because it is not easy to revise legislation that has had so many lives. It is as though we were discussing a cat with nine lives rather than legislation. It is not easy to strike that balance between the interests of the author and those of the user. Several of us have followed the history of the legislation since its inception. One of the things we found in the process of studying the bill in committee was that certain persons or groups, for instance, the teachers' associations, were very comfortable with this bill; they thought the access was reasonable. Since then, some changes have been made.
A rather large number of amendments were made to the bill, but I think that the intention was always to achieve that balance. I know that some associations have written to you, as well as to your colleague Minister John Manley, and there is a letter dated January 23. I read the letter very carefully, the one addressed to you and Mr. John Manley, cosigned by the AUCC, the Association of Universities and Colleges of Canada, the Library Association, the Association of School Boards, the Teachers' Federation, the Research Library Association and the Canadian University Professors' Association; certain issues are raised in this letter. Has any follow-up been given to that letter of January 23 1997?
[English]
Ms Copps: I have a copy of the letter here. It does speak to the issue that we talked about earlier; namely, how you define what is commercially available.
I do not know if you saw the testimony of the writers' union, among others, who came to committee. Basically, they said that any form of exception is a theft. Let us put that in context.
In 1988, the previous government brought in the initial bill. At that time, there was much concern and discussion about how teachers would be sued, photocopies would be abused, et cetera. Since that time, we have had almost nine years experience with the process. That is why organizations like CANCOPY and UNEQ have emerged to do collective negotiation with these institutions.
There is now a commercial value attached to copying that did not exist in 1988. That commercial value is money back in the hands of artists. That is why it is set up. I think the figures will show that administrative costs for organizations like CANCOPY, SODRAC, and others are very low and they basically put money back into the hands of artists.
Prior to 1988, there was not such a commercial attachment to the right to copy. Everyone copied. On the other side of the issue, those institutions which previously were able to copy without paying and have now seen the establishment of a commercial right attached to copying would like to see that copying right limited.
In the original draft legislation a series of clarifications were brought in precisely responding to the requests of those who, in the beginning of 1988, said that we needed these exceptions to be further clarified. When the committee conducted its hearings, time and again it heard that the exceptions that had been opened were too wide and that you would achieve the diminution of the moneys that were being paid to writers for their work as a result of phase two. Therefore, when we broadened the definition of "commercially available" to include books that could be purchased in the store as well as works that would be available with collectives, it was precisely to ensure that we not diminish the commercial attachment to copyright that was set out by the 1988 legislation.
I understand the other point of view, but it can be taken to the extreme. I met with the Canadian Teachers' Federation on another matter but, coincidentally, about the time of this letter. In our discussions, I recognized that they are a public institution which serves a public good and does a lot of great things. However, as teachers, they expect to be paid for their work. Surely, the same should apply, as much as possible, to artists who create something. That is the kind of balance that we have struck in expanding the definition of "commercially available."
Yes, you will hear people say that it will cost us slightly more money. Actually, in this particular area there will not be a substantial increase. The figure of approximately $500,000 was deemed as the extra commercial licensing value for this round. It is not a huge amount of money, but they want more chance to do more free copying, whereas the other side wants no free copying. This falls somewhere in the middle.
Senator Forrestall: Due to the increased cost of tapes, some concern was expressed about the development of a grey market. Do you have any reason to believe that this might happen? If so, how would you control it?
Ms Copps: In the original presentation of the Canadian Association of Broadcasters to the committee three years ago, they suggested that the balance between the artist and the broadcaster could be struck by introducing a charge of $1 per tape on home copying. Obviously, we rejected that because there is no link between the two issues; they are separate issues.
One of the surprises in this process is that there was not a greater public outcry about this. Most Canadians recognize that the vast majority of taping is done to pirate works illegally. There are not many who would champion the stealing of artists' works. Because this regime will legalize something which people have been doing surreptitiously for years, it has not had much negative response from the other side. Of course, we have received a couple of letters from people who are in the business of importing tapes from other countries and so on, but, by and large, I think the public recognizes that the trade-off is a legitimate one to support artists who for years have had their works pirated.
Senator Forrestall: Tell us about the blended sales tax and the harmonized sales tax.
Ms Copps: That is for another committee. This is not a levy. We do not establish the rate. It will be established by the Copyright Board. They will look at what is done in other countries.
Senator Forrestall: Surely, this is policy.
Ms Copps: We direct them, yes.
Senator Forrestall: I am serious. Surely, you will not tax away the income of these poor, starving artists, will you?
Ms Copps: No.
Senator Forrestall: Will you charge BST on the $1 additional charge on the blank tape or on the 40 cents?
Ms Copps: It is not a tax that is paid at the retail sector. It is a recommendation to the Copyright Board and they will be responsible for setting the rate and doing the collection and distribution. It is not done at the consumer level.
Senator Forrestall: Thank you very much, Minister.
[Translation]
Senator Grimard: Madam Minister, I forgot a question I wanted to ask you earlier. As we know, the United States are not a party to the Rome Convention. Do you not think that because of that fact, Canadian artists may encounter difficulties in that broadcasters might be more interested in playing American music to the detriment of Canadian authors or composers, because radio stations do not have to pay royalties since the United States are not members of the Rome Convention. I would like to hear your comments on that.
Ms Copps: The adoption of Bill C-32 will create more jobs in Canada for those who work in the artistic field. In Canada, we are still governed by the standards that require Canadian content on our airwaves, during peak hours or not, in French and in English.
Moreover, if you look at well-known Canadian artists whose recordings sell throughout the world, it has been said recently that, for Céline Dion or Roch Voisine, for instance, who sell a lot of recordings outside Canada, in French as well as in English, it is currently to their advantage to record their work in a country that recognizes the rights in the Rome Convention. Why? Because if Céline Dion makes a recording in France and it is played in France -- France is a signatory to the Convention -- she could receive higher royalties for her contracts in France.
Now that we can sign an agreement to adhere to the Rome Convention, we will be joining 50 other countries, and this will give Canada greater possibilities to produce more recordings at home. There has been a remarkable growth rate in disk production, which has been going on for ten years. Not only could we record in Canada, but we could also record with an eye to sales elsewhere.
As for radio stations, under the current act, part of their repertory must be in French, on francophone channels, and there must be a percentage of disks in English.
Senator Grimard: Madam Minister, I was told that Céline Dion records -- this was used as an example, and my purpose is not to criticize her -- in California. What is the copyright status of a recording Céline Dion makes in California for listeners in Canada?
Ms Copps: There is no difference, that does not change anything.
Senator Grimard: What do you mean?
Ms Copps: It does not change anything for her because if the recording was made in California and the Americans have not signed any neighbouring rights agreement, she receives no royalties.
Senator Grimard: She is not paid.
Ms Copps: That is correct.
Senator Grimard: If she records in Toronto or Montreal, she will be?
Ms Copps: Yes, after the changes, she will be.
The Chair: Senator Poulin, would you care to file the letters you referred to earlier?
Senator Poulin: Yes, this is the letter addressed to Mr. Manley and to Ms Copps, dated January 23, 1997.
The Chair: Madam Minister, I would like to get back to the matter of used books. Students have expressed a lot of concern about used books. In clause 28, on page 61 of the bill, it says, and I quote:
Clauses 44.2 and 45 of the Act are replaced by the following:
We then have section 45(1)(e) on page 63, which says:
... to import copies, made with the consent of the owner of the copyright in the country where they were made, of any used books, except textbooks of a scientific, technical or scholarly nature for use within an educational institution in a course of instruction.
On page 96, under COMING INTO FORCE, the bill however refers to paragraph (1)(e) of section 45 of the Copyright Act in paragraph (1)(d):
shall be read as follows during the period beginning on June 30, 1996 and ending on the day that is sixty days after the day on which this Act is assented to:
You were saying earlier that there was an exemption, but if this comes into force, there will not be an exemption.
Ms Copps: You are talking about two different things: the bill gives educational institutions the possibility of importing textbooks that are needed for teaching. That is not the same thing as importing books for commercial sale to students.
The Chair: The situation is different for used books.
Ms Copps: If a professor gives a course on microbiology originally prepared by a professor from the University of Texas, she can have the book imported; in that case, there is an exemption, with no problem involving copyright or parallel imports.
However, if a company -- and I think there is only one in the U.S., which goes by the name of Follet -- wants to sell used books in Canada to a certain number of students or if they are attempting to do something they cannot do with new books, we want to have the capacity of reacting through regulation. This is not provided for in the Act as such, because we want to see what happens with used books.
The Chair: Why indicate it in the Act, if there are going to be regulations, and if we say that there is an exemption?
Ms Copps: In 1988, we adopted the bill and then several points were reviewed. That is why we are proposing exemptions now. This was promised in 1988. We were trying to focus the exceptions in a narrower way and also to provide relief to the professors who were afraid of being sued for breach of copyright.
In the beginning, we did that for new books, period. When the bill was studied in committee, members were told that although new books could not be imported in some cases because of commercial contracts, the same books could be used the next year and imported in large numbers to Canada through a company that collects books from all of the institutions in North America and then resells them; in that case, discussions should be held on regulation. If there are regulations issued, they should of course be preceded by discussions, and published in the Canada Gazette. Things will eventually be reviewed, should we go forward. We are acting pursuant to a concern raised by the committee which we found legitimate: in the university context, a lot of books do not change from one year to the next. If someone wanted to import 100,000 used books to get around the law which governs the importation of those books, we wanted to have the possibility of regulating after the fact. We did not want to have to wait for the third phase of the Copyright Act, which might be several more years in the making.
Senator Bacon: I would like to get back to my question. Clause 4.(1)(e) refers to the coming into force of the bill, 60 days after Royal Assent. If the legislator does not intend to apply the provision, why is it included in the Act? You will understand that this worries students.
[English]
Ms Susan Katz, Department of Canadian Heritage: Perhaps I could add a few comments to what the minister has already mentioned.
As you know, within the parallel importation provisions, there is what we call a retrospective provision. Provisions such as this ensure that there is no stockpiling of books in Canada as the bill moves through the parliamentary process. Indeed, after Royal Assent plus 60 days, distributors would still be able to act on those retrospective provisions.
However, these provisions do not apply with regard to used textbooks in any way; they apply only with regard to new books until such time as a set of provisions is put in place. As the minister mentioned earlier, there may in fact never be regulations with regard to used textbooks, so the parallel importation provisions as they affect used textbooks will not apply.
The day of Royal Assent, the day after Royal Assent, and 60 days beyond, there will be absolutely no change in how the used textbook market operates.
The Chair: It is, however, in the bill. What do you tell those students who are worried about that?
Ms Copps: A student, now and into the foreseeable future, with no problem, can purchase any used book they want. At the moment, most of the used books sold in Canada are sold by other students, and that provision will not touch that.
There is a market for used textbooks coming from the United States. They originate in Canada, go to the United States, and are then resold in Canada by a large distributor. While watching how this copyright legislation works, if, in a year or two, we see that all of a sudden we have 100,000 copies of used books coming into Canada at ridiculously undercut prices where licensing agreements already exist in Canada for that book in its new form, then we would have the power to regulate. It is a provisionary power which is not being exercised, and therefore no student should be in a position of having his or her purchasing requirements affected by this in its current form. We will monitor it, and we have said that any future changes would need to be done by regulation, which would then require a proper process of public discussion.
We have also been in touch with the intervenors, such as the Canadian Booksellers Association, book publishers, students, and others. The message which came out originally was that no one would be allowed to buy used books. That is not true. Most students facing a financial crunch at universities will obviously want to bring every possible resource to bear on their situation, including getting books as cheaply as they can. We do not want to infringe on that, but we also do not want to see a situation two years from now where we have 100,000 used books arriving from the United States and being sold in an area where a Canadian author has been licensed to have his or her books sold in Canada.
The Chair: You want to leave that in the bill.
Ms Copps: The bill permits us to regulate if necessary. It still must be done by regulation in the future. It is not in the bill. The 60-day period to which Ms Katz referred is the 60-day period, once the law is put into force, before anything can happen to anyone. Used books can continue to be sold and imported into the foreseeable future. Unless and until we see a dramatic change in the importation of used books which speaks to a back-door way of getting around the parallel importation provisions, we will not be legislating.
Senator Johnson: Phase II took 10 years. Do you have any idea of the timing of Phase III? Have you begun work on it?
Ms Copps: I have my own ideas, but I would prefer to see Phase II come to fruition before I enter into the territory of Phase 3.
Senator Johnson: However, in your presentation, you mentioned the Internet and CD-ROMs, which is where it is at today, and that will make copying of copyright material even easier. Do you have a plan in mind, if you get this bill through the Senate?
Ms Copps: So far, I have been working on this aspect, and it obviously took a great deal of work. I thank not just the senators but my colleagues in the house who had meetings upon meetings on this subject. I met with them myself personally probably 15 or 20 times. We do have some ideas within the department, but we want to work in concert with IHAC and others concerned about these issues.
Meanwhile, the Internet application itself is already bringing some discipline. I tried to read The Globe and Mail the other day on the Internet, and I could only do so if I paid.
Senator Johnson: Thank you. We look forward to Phase III.
Ms Copps: There is a built-in, five-year review in the legislation which should precipitate that.
Senator Johnson: We should thank the minister and her team. They have done an incredible amount of work on this.
The Chair: Thank you, Minister. We might need you on April 21. I think you should look at your calendar. That would be the last day of this committee's hearings. You might need to return and answer some questions the senators may have for you.
[Translation]
We have before us members of the Copyright Board, Mr. Michel Hétu, Vice-President and CEO, and Mr. Claude Majeau, Secretary. You have an hour and a half for your presentation. You are accompanied by another person, Mr. Majeau?
Mr. Michel Hétu, Vice-President and CEO, Copyright Board: To my right is Mr. Mario Bouchard, General Counsel for the Board.
The Chair: Please take the time you need. However, we do want some time for questions. You will be giving your presentation, then we will have a period for questions by senators.
Mr. Hétu: I will start by thanking you for this opportunity to speak to you about Bill C-32. I also want to point out that another member of the Board is present, Mr. Andrew Fennace, who is in the room.
I last had the pleasure of appearing before a committee of the Senate in March of 1988. It was before the Standing Committee on Banks and Commerce, which had been asked to review Bill C-60, Phase I of the Copyright Act revision. I was there in my role as General Counsel to the Department of Communications, accompanying the then Minister of Communications, the Honourable Flora MacDonald.
As I was recently reviewing the transcripts of these proceedings, I was reminded of the extent to which Phase II of the Copyright Act revision was on the mind of those who were examining Bill C-60.
The bill dealt with a number of issues: a new exhibition right for artistic works, new and expanded moral rights, the abolition of the compulsory licence for the making of sound recordings, the clarification of the law concerning the protection of computer software, and the provision of more remedies to combat commercial piracy, all measures intended to modernize our copyright legislation which dated back to 1924. However, first and foremost, the bill established a framework which was intended to provide two things: easy access to copyright material and fair and reasonable compensation for the use of protected works. That framework comprised two main instruments: the collectives and the Copyright Board.
There was one big element absent in that bill: the exceptions. This was presented as a Phase II issue. Discussions were still on-going with interested parties and the government did not want to delay the adoption of the measures that were ready. There must have been a certain amount of wisdom in that decision, since it took nine years, instead of the proposed six months, to finally come up with detailed provision on the subject of exceptions. However, this phased approach did create problems for the passage of Bill C-60, including before the Senate.
A central purpose of Bill C-32, therefore, as I see it, is to complete Phase I of the Copyright Act revision. Exceptions do indeed represent a large part of Bill C-32. However, since nine years have passed, other matters were included in the matter which is in front of you, including two new copyright regimes, the so-called neighbouring rights for performers and producers of sound recordings, and a regime of compensation for the home-taping of sound recordings, both of which will involve the Copyright Board.
Today, I do not appear as an advisor to the Minister responsible for this bill. I speak on behalf of the Copyright Board, which under the bill is given new responsibilities to see that the system as proposed will work properly and to the satisfaction of both creators and users. I am here to answer your questions and those of the members of this committee, not to comment on the merits of the various new rights and exceptions contained in the bill. Having said this, and before we get to these questions, I would like to say a few words about the collective administration of copyright, which is so central to this bill, with a view to putting Bill C-32 into some perspective.
Let me first recap briefly where we come from: until Phase 1, the Act only dealt with collectives involved in the management of performing rights and musical works. For some 60 years, these societies, which have now merged into SOCAN, have been required to get their tariffs approved by the Board, on a regular basis.
Of course, there were other copyright societies operating in Canada before 1988, but their status under the competition legislation was at best uncertain. The decision was made in Phase I to legitimize their operations and generally encourage their growth. At the same time, a recourse was granted to users to ensure that royalty payments to collectives would be fair and reasonable. That was one of the objectives of the new Copyright Board whose jurisdiction was extended to all collectives operating licensing schemes.
Although the earlier regime was maintained for SOCAN, it was decided that all other collectives should be dealt with differently. The Board would get involved only where a collective and a user were unable to agree on the terms of a licence and decided to refer the matter to the Board for resolution. Akin to arbitration, this new regime clearly favoured negotiation and agreements between collectives and users. The regime seems to be working well. I base this conclusion on the very fact that in the nine years since it has been set up, the Board has only received a handful of applications, all of which have been withdrawn following agreements between the parties.
Phase I also provided users with a new mechanism allowing them to apply to the Board and obtain a licence when the copyright owner could not be located. In this exceptional regime, the Board acts, in some ways, as a collective society for unlocatable copyright owners. From the beginning, the Board has closely involved the collectives in the administration of this program. We consult them not only to help determine whether the applicants have made adequate efforts to locate the copyright owner, but also to establish a proper price for these licences. In return, we require that the licence fees be remitted to the relevant collective.
In 1989, the Free Trade Implementation Act further amended the Copyright Act so as to introduce a regime of compensation for the retransmission of distant radio and television signals. As a result, new collectives were created representing program producers, sports leagues and the broadcasters. Collective administration is a must in this case.
We now come to Bill C-32. Many organizations representing rights owners criticized the bill when it was introduced as a step backwards from Phase I. While I am sure more could have been done to support collective administration of copyright, it would be a mistake to think that the bill, as it now stands before you, is not in line with the framework established in Phase I.
Collective administration of copyright is more than ever central to Canada's copyright system. If Phase I legitimized collective management and laid the foundation for growth, Bill C-32 increased its relevance and its importance, and therefore the role of the Board, to a degree that many of us have yet to fully understand.
It contains a number of new rights and exceptions, many of which have a direct or indirect impact on collective management and ultimately on the Board. Let me review some of them.
[English]
Neighbouring rights are granted to performers and producers of sound recordings, but the main ones -- public performance and telecommunication -- are simple rights of remuneration and must be exercised collectively on the model of SOCAN. Inevitably, one or more collectives will be created to administer these new rights.
The home-taping regime is also premised on the existence of one or more collectives representing music writers and publishers, performers, and record companies. It is modelled on the retransmission regime. The board will set the royalties and apportion them between the collectives, should there be more than one.
Existing and yet to be formed collectives will also be involved in the mandated royalty schemes for the off-air taping of news and other broadcast programs for educational purposes. Here again, the regime is modelled on retransmission. Tariffs will have to be filed by the relevant collectives.
As you know, many changes were made to the bill as it went through the House of Commons. Several of them again revolve around the collectives.
Broadcasters finally obtained the exceptions that they have been demanding for so many years, the so-called "ephemeral recording" and "transfer of format" exceptions. However, neither exception will apply where a licence is available from a collective.
Certain exceptions which did not apply where the work being used was commercially available, which referred to a physical copy, will also not apply where the right to use the work can be licensed from a collective. This concerns the reproduction of works by teachers for the purpose of tests or examinations and the reproductions made to protect the permanent collections of libraries, archives, and museums.
The exception concerning the use of photocopying machines located on the premises of educational institutions, libraries, archives, and museums has also been changed. Clause 30.3 now says that the exception will apply only where the institution has a licence from a collective society.
All of these measures are powerful encouragement for rights owners to organize. Presumably they will, although in certain cases there may be little financial incentive to do so. If they decide to exploit these markets, the board will come into the picture. Where users are unable to obtain proper terms and conditions for the use of this material, they will be able to ask the board to intervene and strike a proper balance.
I should also like to say a word about one reform included in Bill C-32 which, in my view, has not been given enough attention and which, in the long term, has the potential to fundamentally alter the manner in which many collectives do business. I refer to the option that collectives such as CANCOPY, UNEQ, and others will now have either to remain subject to the arbitration regime or to file tariffs with the board on the SOCAN model. Collectives facing enforcement problems similar to SOCAN because of the multiplicity of users within a particular market will thus be able to obtain from the board a certified tariff enforceable against all users during the life of the tariff. Currently, these collectives must negotiate agreements with each and every user and, failing an agreement, must apply to the board to arbitrate the issue. This case-by-case procedure is cumbersome and can be costly.
As I read recent reports about class actions that freelance writers have taken in Toronto and Montreal concerning the use of their writings on the Internet and on a variety of electronic databases, I could not help thinking that this is an area where the tariff route might indeed prove useful. Whoever may be the rightful owners of these electronic rights -- although this is not the point I want to make -- Bill C-32 now offers another way of exploiting these markets; the SOCAN model.
As you may know, music writers and publishers, through SOCAN, have already filed an Internet tariff with the board which we call Tariff 22. If we are successful in adopting a workable and acceptable tariff in this area, this may incite other rights owners, including for print material, to follow this precedent.
I would not want to leave you with the impression that Bill C-32 could not be improved upon. The bill, as initially tabled last year, contained a number of substantial and technical measures which were not to our liking. Several amendments were made by the House of Commons, some of which went a long way toward answering some of our concerns. However, not all of our suggestions were acted upon.
As we all know, there is to be a review of the legislation within the next five years. This will give all concerned, including the board, an opportunity to examine how we have been doing under the act and to ask that certain matters be revisited.
I can already name a few items which, in my view, would warrant re-examination at that time, including a clarification of the legal status of agreements entered into by users and collectives. In the general arbitration regime, agreements override any tariff approved by the board, but not so in the SOCAN regime, which will also apply to neighbouring rights. There appears to be no good reason to treat these agreements differently.
Measures to ensure more transparency in the area of collective administration will also be welcome. These measures would include the filing of agreements with the board with a view to ensuring more discipline in the marketplace.
I should like to see a simplification of the off-air taping regime in order to allow the collectives and the educational institutions to deal with this by way of agreements rather than tariffs, as well as a modification to the unlocatable copyright owners regime to give to the collectives themselves, instead of the board, the authority to issue the licences in the first place, the board acting only where no collective is available.
A review of section 68.1 concerning the special royalty rate applicable to radio stations for the use of sound recordings would be welcome.
As well, although this did not form part of our original submission, there could be a review of certain provisions of the act dealing with joint and several liability to determine how they should impact on the board's responsibility to set tariffs.
Having said this, if you asked me whether Bill C-32, as it now stands, is workable from the board's perspective, I would answer yes, most definitely. Indeed, we look forward to exercising our new responsibilities.
With this, I will conclude, Madam Chair. Thank you for allowing me to present the views of the board to your committee. I am, of course, available to answer any and all questions.
[Translation]
The Chair: Thank you for your presentation. Before giving the floor to my colleagues, I would like to ask you a question. What fee regimes does the Copyright Board presently oversee? In what way do the new regimes provided in Bill C-32 differ from the current ones?
Mr. Hétu: I listed three regimes in my presentation. There is the SOCAN regime, under which rates are set for public music performances. There is another regime that applies for the retransmission of distant signals carried by cable distributors. I referred to that one as the transmission regime. Finally, the third is the general arbitration system which applies to all other collectives.
The SOCAN and retransmission regimes essentially work the same way; tariffs are filed periodically, examined by the Board and approved. In fact, there are two ways of involving the Board, or two different approaches for the Board's intervention.
Under the general arbitration regime, the Board gets involved on request when the parties are unable to agree. Under the other two regimes, it is up to the collectives to file proposed tariffs and have them approved, according to the procedure outlined in the Act. The collectives' right to collect fees for the users is based on the tariff.
The bill does not fundamentally change that approach. The remuneration regime for performers and recording companies, as well as the regime governing copy for private use will use tariffs, as do the SOCAN and retransmission regimes. The same conditions will apply to recording television programs for educational purposes, as provided for under the special exceptions granted by clauses 29.6 and 29.7.
What is new, and I referred to this in my presentation, is the possibility collectives will have -- until now they were subject to the arbitration regime -- to opt for the SOCAN regime, with filing of tariffs. Consequently, if they so desire, they may chose that regime rather than individual, separate agreements with the users. If they chose that option, of course the Board's workload will be increased. That is an overview of how these new regimes will work.
Senator Grimard: Mr. Hétu, if I understand correctly, in the beginning you warned us that you did not want to express any opinions on whether certain amendments or clauses of the bill were well advised or not; am I mistaken in saying that?
Mr. Hétu: Yes, that is what I said.
Senator Grimard: For my information, I would like to know who appoints the members of the Copyright Board. How many are there, what is the length of your mandate, et cetera?
Mr. Hétu: The Governor in Council appoints the members of the Board. Under the Act, there are five members at the most. At this time we are three. The members are appointed for five-year terms, and these can be renewed only once. Personally, I have been a member of the Board for eight and a half years, close to nine; there is one year remaining in my term.
Senator Grimard: Is it renewable?
Mr. Hétu: In my case, it is not renewable, because this is my second term.
Senator Grimard: Mr. Hétu, does Bill C-32 give the Governor in Council more powers than before? Not the previous legislation, but the current one.
Mr. Hétu: Yes, it does. Through the Copyright Act, Bill C-32 gives the Governor in Council, cabinet, a general power to give broad directives to the Board insofar as setting a tariff is concerned, and to direct general thrust of the Board's decisions. This is a power of a general nature. At the present time, cabinet has the power to set that kind of criteria for the Board, but only insofar as retransmission is concerned.
This power has now been generalized to cover all of the areas that fall under the Board's jurisdiction. In our presentation to the House of Commons, we recommended that this provision be slightly amended and our recommendations were for the most part acted upon. The nature of the directives, for instance, which was not specific in the original text of Bill C-32, is now specifically outlined. It is made clear that these are to be general directives and not detailed directives on a broad range of issues. It is preferable to have a reference to broad directives.
We have also added the fair and equitable tariff test to paragraph (a) of the article referring to setting tariffs. Consequently, this has created guidelines for any Cabinet intervention. It was important that these changes be made, and they have been. However, paragraph (b) of that clause has not been deleted; it concerns the Board's decisions. We will see, in practice, if directives will be given to us in that case and whether they will be acceptable or not.
Senator Grimard: Can the Copyright Board's decisions be appealed? If so, what is the process that must be followed?
Mr. Hétu: At the present time, for the retransmission regime, there is this power of providing instructions to the Board. The Board's decision could also be appealed to the cabinet. When the Board handed down its first decision, it was appealed to cabinet, but the cabinet refused to change the decision.
This revision power has been maintained in the Bill. What is different is that the right has been given to provide directives before the fact, rather than intervening after the fact. That is acceptable as a control principle, or a means of providing direction to administrative bodies such as ours.
As for appeals as such, the only appeals that are allowed are known as revision applications and they are filed with the Federal Court, by those who feel that the Board may have exceeded its jurisdiction or not made competent decisions. However, the court's decisions cannot be substituted for our own; the matter is eventually referred to us. This has never actually happened; although several of our decisions have over the past few years been appealed to the Federal Court, none of them have actually been referred back to the Board.
Senator Grimard: The possibility of imposing a tax or an amount of approximately 35 cents per cassette on blank audio tapes was discussed in the other place. Approximately 44 million cassettes were sold in Canada in 1996, and we were told that out of those 44 million, there were probably 39 million that were used to copy songs or other musical works. Is it up to your Board to set the amount of that additional cost? What would you base that decision on? Will you consider the fact that there is a range in the cost of cassettes, that can sell for $1, $3 or $5, for instance? Some allow you to make recordings that last a half-hour, others two or three hours. I would like to hear your point of view on this matter.
[English]
Senator Forrestall: Do not forget the tax.
Senator Grimard: I did not use the word "tax."
Senator Forrestall: No, I did.
[Translation]
Mr. Hétu: This matter of tariffs that would eventually be set by the Board for neighbouring rights and private reproduction has yet to be examined by the Board. We are a tribunal, and are subject to a certain process under which the applicants, the collectives, make proposals, and future payers will generally make counter-proposals by way of this same process. The figure you quote, according to the information we have, represents the average of the fees paid in certain jurisdictions throughout the world. The average was determined and divided by the number of countries and that is how the figure of 37 cents was arrived at. I would be surprised if this were the process used by the Copyright Board. That is one figure, but at this stage of the proposal the Board has no idea of what the final fee will be. Various arguments will no doubt be put forward -- of the kind you have yourself raised -- either to justify various amounts according to the duration of the cassette, or different rates depending on the cost of the cassette. I am sure there will be a multitude of proposals made and they will have to be examined on their respective merits.
Senator Grimard: I want to correct something; I did not arrive at that figure myself. The figure was mentioned in the other place, when the bill was studied by the committee. So, the figure of 37 cents does not come from me.
Mr. Hétu: I understand.
Senator Grimard: I wanted to establish that fact. You referred to another important matter, the additional cost of neighbouring rights. We know that at the present time only music composers and songwriters benefit from those rights. Under neighbouring rights, we want to add performers, musicians, producers and others to the list. I was told, and correct me if I am mistaken, that to cover existing rights, an additional 3 per cent might be needed. What would be the additional cost, according to you, of granting neighbouring rights to the three categories? I would like to hear your comments on that topic.
Mr. Hétu: My comments are going to be strangely similar to those I've just made on copying for private use. What can I say? The proposals have to be heard. We have to give the parties the opportunity of presenting their proposals, and their counter- proposals, and of submitting credible proof on both sides; the Board has to have the opportunity of examining this documentation and the expert testimony that will be submitted to it and after all of that process we will see what seems fair and reasonable.
You know that there are certain predetermined elements in the Bill concerning neighbouring rights, such as a preferential or special tariffs for radio stations that have a turnover of less than $1,250,000. That same tariff will apply to the first $1,250,000 made by the other stations, the larger radio stations.
These elements will no doubt have an impact that is sure to be referred to by the parties seeking a particular outcome; we shall see.
Senator Grimard: We know that broadcasters are the ones who will be the most affected by this new increase involving neighbouring rights. Now, can you tell me, approximately of course, what percentage of broadcasters and other users such as bars and restaurants would have to pay this additional cost?
Mr. Hétu: It would be impossible for me to say, today. You know that in the bill neighbouring rights are granted to member countries of the Rome Convention. Consequently, the repertories that will be the object of tarification by the Board will vary according to their use, simply because if you go into a discotheque, it is possible that the recordings being played there may be American for the most part and thus would not be eligible.
Senator Grimard: So they have no rights to pay?
Mr. Hétu: Yes, whereas they do have to pay at the present time, since those works would come under the SOCAN repertory. The same comment would apply to any other public place, be it a bar or some other venue.
That is why I referred to markets that do not necessarily present potential financial interests for collectives. Not everyone falls under the neighbouring rights regime; the United States, for instance, are not a party to it. This reduces the value of the repertory. Where broadcasters are concerned, we know that there are certain Canadian and French-language content rules and that some stations will use certain recordings pursuant to the bill. This will certainly increase the level of rights or royalties to be paid. Hhowever, it is impossible to establish a percentage, as you asked.
[English]
Senator Forrestall: I will come back to taxes. I do not mind talking about taxes. I was not talking about confusing "taxes" with any other phrase at all.
If, for example, the tax is $1 on a $3 cassette, will I pay the 15-per-cent GST-plus-PST on the final price tag of $4 or on the original cassette price of $3?
Mr. Hétu: When we adopt Paris, many formulae can be used. It is a question of selecting the proper formula for the proper use and ensuring that there is a certain connection with the value of that particular right.
In this case, many formulae could be devised. It could be a flat fee for every cassette of a certain duration. It could be a percentage of the wholesale price. It could be a variety, or there could be a combination of formulae. You could have various formulae within the same tariff.
It will depend upon the arguments by those who want to have a percentage of the sales price. Their argument might be that their cassettes sell more because of their higher quality and, therefore, the music that you will hear from it will be of a better quality and, therefore, the payment should be higher. There are all sorts of variations on that theme.
Senator Forrestall: That is a theme. We all appreciate the variations on the theme. At the end of the counter is a cash register. On what do I pay 15 per cent?
If that has not been considered, that is fine. I am not trying to provoke a debate on what is taxable. I would hate to be caught in the latter part of my suggestion, implying that I would pay tax on royalties which were going to someone for their creative and productive efforts. It would bother me if that was in our tax system. If the matter has not been addressed, that is fine.
Mr. Hétu: According to that scheme, we would intervene before that cassette reached the market.
Senator Forrestall: We are talking about millions of dollars. It is an important question. The minister did not want to or could not answer that question. Obviously the matter has not been considered.
[Translation]
Senator Losier-Cool: Mr. Hétu, I greatly appreciated the brief history of the bill that you gave us. In 1988-89 I was a teacher in a large high school in New Brunswick where the matter of copyright on photocopies was a very relevant issue, and it still is today, even with this bill.
I refer you to pages 6 and 7 of your report, where you mention that the House of Commons did not act on all of your recommendations; you then make a list of suggestions. In that list, I see no suggestion about the use of photocopy machines. This is a source of concern for educational institutions, archives and museums; we have heard many comments. Do you think Bill C-32 is satisfactory in that regard and that it meets those concerns?
Mr. Hétu: I am aware of the concerns presented by the various parties, copyright holders on the one hand, and users on the other. I know of the concerns expressed by educational institutions, archives, museums, et cetera; these are really matters of substance that the minister had to respond to. The bill as it stands approves fair and equitable tariffs. In my opinion, the government has proposed a bill to the two Houses of Parliament and it is up to the legislator to strike the needed balance. The balance involves all of these issues: the new rights on the one hand, the exceptions on the other, the creation of the Board, recourses. In a way, we fall under the heading of "recourses." But it is incumbent upon you to establish that legislative balance, not me.
The Board intervenes to strike financial or economic balance, to set fair and equitable tariffs; that is our role and that is where we must strive to be as fair as possible. The situations vary depending on whether you are a teacher or a business. A board like ours that will have to set prices will have to take such considerations and circumstances into account eventually, when it is asked to set tariffs applying to educational institutions, public libraries, et cetera.
I think that is where the ultimate fine-tuning of the legislative balance you will have put into the Act will occur.
Senator Losier-Cool: As it stands, on the matter of electronic distribution, does the bill meet the electronic challenge?
Mr. Hétu: I alluded in my presentation to an Internet tariff. I referred to it as tariff 22 of SOCAN, which was filed with the Board sometime ago, and about which we have not handed down any decisions. Some preliminary legal work has to be done first which involves the parties concerned. This tariff is based on the current act. I mean, the SOCAN proposition is based on the current act. It asks for compensation for the use of music on the Internet.
The Board will eventually come to a decision. That decision may go before the Federal Court; it may be asked to determine whether that tariff has a sufficient legal basis.
Bill C-32 now opens the way for similar tariffs involving record companies.
When you think of the Internet, tariffs might not only apply for musical works. When this bill is passed, those who hold copyrights on audio recordings, and performers, will have the right to receive remuneration if their works, performances, or records are made available to the public through telecommunications. This is the same legal basis SOCAN is claiming at the present time for its tariff 22.
That is the comment I would make about the new technologies. What many people have said about this, about Phase III -- I have not had the opportunity of discussing this in detail -- is that the next act should address matters of electronic distribution and grant exclusive rights to copyright holders, and not just the right to remuneration. I think that knowing whether electronic distribution is protected at the present time hinges on that concept to a large extent.
[English]
Senator Milne: Mr. Hétu, following on the question I asked the minister earlier, if I read your remarks correctly, the Copyright Board, through the 1988 legislation, is already involved in the case of copyright for unlocatable authors. Further, under the new bill, this will be turned over to some collective.
I am concerned about how diligently libraries and archives would be required to pursue unlocatable copyright owners. I am beginning to be afraid that these public bodies will be put to a great deal of time and expense in order to comply with this portion of the bill. I foresee something like a collective of unlocatable people. Therefore, let us leave it to the libraries' approach. I hope that this is wrong and that you can assure me it is wrong. I should like to know the Copyright Board's position on this.
Mr. Hétu: The current regime applicable to the unlocatable copyright owners is as follows: It applies only to published works. A user who is unable to locate the copyright owner to reproduce, for example, a picture in a catalogue or an artistic work or some other things, or to insert three or five minutes of something into a film, can apply to the board to obtain a licence to do so. The only thing required under this act is to show that reasonable efforts have been made to locate the copyright owner.
Since there is only one person appearing before us asking for that licence, in order to determine whether we should grant it, we contact the collectives whose business it is to issue those licenses for their members. Normally, an unlocatable copyright owner is a potential member of a collective. Therefore, we deal with a collective to determine, if that person were a member of the collective, how much they would charge for a licence to do what is being requested of the Copyright Board. We are in direct contact with the collectives, and we apply their own rates. The users are happy to get the licence from us, which is the right to do what they could not do otherwise. They are willing to pay the amount that would otherwise be payable with the collectives.
Senator Milne: The collectives are probably quite willing to accept the money even though they do not know to whom it should go.
Mr. Hétu: The legislation provides for the holding of this money for five years in case the unlocatable copyright owner shows up. That is the scheme in the act. Since we are receiving the assistance of those collectives, it makes sense to determine whether or not we should issue the licence and at what price. It seems logical to give them the money to hold on behalf of that member. That is in return for the services that we get from them.
Senator Milne: I am referring specifically to libraries and archives. What charge apply them on this type of thing? I can see this becoming very rapidly a prohibitive cost.
Mr. Hétu: Do you have a particular section in mind?
Senator Milne: I am reading from your page 7, which states:
... a modification to the unlocatable copyright owners regime, to give to the collectives themselves, instead of the Board, the authority to issue the licences in the first place, the Board acting only where no collective is available;
I can see this issue becoming time consuming and expensive for libraries and archives. I am not concerned about individual people coming to the board and saying, "I want to use a chunk out of this." I am concerned about a library and an archive.
Mr. Hétu: The current regime has been in place now for nine years. We have never had a library apply to us to seek the authorization to reproduce a book or something of that kind. They do not do that. Even though they cannot locate the copyright owner, it has never happened. They would turn to the current act to do that, not to the revised one, or to Bill C-32, or whatever.
Instead of us doing the work that is normally done by the collective, we proposed that these people who want their licence should first go through the collective. If they are not successful, then they should come to us.
Senator Milne: Is that what you see as a result of Bill C-32?
Mr. Hétu: No. Bill C-32 does not do that. The power remains with the board, and the board will continue to issue those licences and to carry on as we have in the past. We are indicating here that we might come back to this next time. It will not be me, but next time we will probably be again trying to convince Parliament that the modification should be made to that regime.
Senator Milne: I hope they do not come back to you on that one.
What do you see as a reasonable effort to track down a copyright owner? How do you define "reasonable"? You must have some guidelines.
Mr. Hétu: We do have some guidelines for people who apply to us, depending upon what kind of work it is. For example, if it is literary work, we ask them to contact the publisher, if the publisher can be found. Often in those cases you cannot find the publisher. It may be a publication from 30 or 40 or 50 years ago, and you cannot find it after reasonable research. Again, it depends very much on the use. If the reproduction you want to make is for use in school -- which is the kind of thing that we issue -- you do not ask these people to go through complex research, although you might ask that of a film producer who wants to commercially exploit this piece of material in his film. It would depend on the circumstances. To this day, we have never had cases which created that kind of problem for us.
On the contrary, people come to us for reassurance that they could use this. Prior to 1988, people would use it, but without authorization. At least now they have the authorization of the board to do it, and they cannot be held responsible should the copyright owner show up and say, "You have been using my work without permission," while they say, "I have the permission of the board."
Senator Milne: Since this situation has never arisen, there is no body of law stating what "reasonable efforts" are.
Mr. Hétu: No.
Senator Johnson: This legislation will be reviewed in five years. You alluded to part of my question before, but we did not get any reply. The bill we are now examining does not deal with how the federal government can regulate the free flow of information on the Internet or the protection of e-mail or other questions dealing with current and future technologies and transmission delivery systems. This is supposedly to happen in phase three.
I asked the minister about phase three this afternoon, particularly relating to the copying of writers' works and whether it will be dealt with in the next phase. It is not only writers who will be affected if we take another 10 years to deal with our copyright laws.
Can you tell us if there is a way to get on with the next step, if this bill is passed next week, and what your role as a board will be in terms of phase three? Technology is moving extremely quickly. We are not even covering it in this legislation. Canada is behind. How can we begin to catch up if we wait five years to review? What will your board do in terms of its role as a government agency?
Mr. Hétu: My first comment will be on your last point. The board is reacting to proposals put to it by collective organizations. The responsibility of the board is a limited one. We only intervene when rights owners get together and administer their rights collectively. It is because there are collectives in this country that the board exists. Therefore, when a collective is administering certain rights on the information highway, that collective would be potentially subject to the board's jurisdiction.
I described a few minutes ago the situation of a collective requesting us to approve a tariff for the use of music, but it could be for the use of other material on the Internet and the information highway. That collective will come to us, and the tariff will be published in the Canada Gazette. Users who might be affected by that tariff will come to us and object to the payment of that tariff or to the fact that the tariff targets them. They will ask us to approve a tariff which does not apply to them or that is a certain amount rather than the amount set.
There is, therefore, a process, and that is how we become involved. We do not determine whether the law should be changed or not. We take the law as it is. Right now, under the law, without Bill C-32, we are seized of a proposal to fix a tariff for the use of music on the information highway. When we arrive at our decision, you will have an answer as to whether or not the act now protects those kinds of activities.
Does it protect it properly and sufficiently? Those are other matters. Phase three will become extremely important in ensuring that our law is fine-tuned so that what needs to be protected on the highway will be protected.
When you indicated that our law is outdated in this respect, was that a categoric statement?
Senator Johnson: It seems slow to respond to the new millennium.
Mr. Hétu: There have been recent reports from the government, the Department of Industry, about the stages of the law.
Senator Johnson: Your board is actually a conduit. Are you saying you respond to what comes before you?
Mr. Hétu: We have a jurisdiction, and we exercise it. We do not have a proactive role.
Senator Johnson: The proactive side comes from the government. The minister could not answer the question this afternoon as to when that would possibly be undertaken, so I ask it again. Perhaps the minister should appear before us. Perhaps the minister would have more information on that subject. I cannot seem to get an answer.
[Translation]
Senator Grimard: With your permission, Madam Chair, unless I am mistaken, we will be getting back to the levies -- let us not call them taxes on -- cassettes that you will be setting. Under the bill, would this levy be collected from retailers, or from the manufacturers of cassettes?
Mr. Hétu: Under the terms of the bill, the importers or manufacturers must pay these levies. The retailer will not have to make those payments.
Senator Grimard: I'm very happy with your reply, because a few representatives visited me to object to this levy; they claimed it should be collected from the manufacturers rather than at the retail level.
Mr. Hétu: That is not my understanding of the bill. The bill states very clearly that the levy is to be paid by whoever manufactures blank audio tapes for commercial purposes in Canada, or imports them here. That person must pay levies to the organization responsible for collecting them on the sale or other disposal of those tapes in Canada; it is that person who is responsible for paying those levies under the terms of the bill.
Senator Grimard: I understand that you must follow the law. On the other hand, if we look at the fact that the manufacturer is the one who must pay this royalty, aren't you afraid that some tapes will be sold -- to use the expression one hears -- on the black market or the grey market, to avoid these levies? Will you be considering all of these factors when the time comes for you to set the level of these levies?
Mr. Hétu: The department must have examined all of these considerations when they decided to proceed in this way, I am sure. By choosing to have levies paid by importers or manufacturers, you are limiting administrative costs to the regime considerably. I don't know how many producers or importers of tapes there are in Canada, but there surely are not thousands of them. However, if retailers had to pay the levies, you would then have a regime which would be very difficult and very expensive to administer.
I presume, although I've not had the opportunity of discussing it with them, that this was surely present in the minds of those who conceived this regime.
Now the Board will set the price of the cassettes to be sold by these people, the importers and manufacturers. We will not be there to ensure that there is no black market; that is not our responsibility.
Senator Grimard: Thank you, Madam Chair.
Senator Maheu: Mr. Hétu, I thought I heard two different answers. Senator Forrestall asked a question concerning the money that would be collected, and Senator Grimard was talking about a levy, and not a tax. Are we talking about the same thing? Are we talking about the same amount, or two different amounts?
Mr. Hétu: In English, the bill talks about a "levy" and in French, about a «redevance». The word «redevance» is also found elsewhere, in the Copyright Act. The payments to be made are called «redevances» in French. We used the same word for home copies made for private use, the «redevance» to be paid to compensate authors, et cetera. In English, we used the expression "levy," I don't know why, rather than "royalty."
Senator Maheu: Is the 37 cents to be applied to cassettes a levy or a tax, on the view of your Board?
Mr. Hétu: It is not a tax, it is a levy.
Senator Maheu: And it is not possible that at some point it will begin calling it a tax?
Mr. Hétu: No. it is not a tax, so no.
Senator Maheu: A levy that does not go into government coffers?
Mr. Hétu: Taxes are set by Parliament; we set levies.
[English]
Senator Forrestall: I was referring to the GST or the BST. If it is not some form of a levy or tax and therefore becomes part of the intrinsic value, that is, the nature of the tape itself, then it is subject to tax.
My concern is that if we are to raise money for the creative community in this country, and if we are to use a tape, in one case, for example, then let us find some way of doing it which does not require the distributor, the importer, or the retailer, be it a retailer for wholesale or commercial purposes, to include in the value of that item the amount of the levy your board will establish after consultation with the various societies.
Senator Maheu: Are you talking about money that would be going to the government or to this organization which will be giving royalties to the artist or the writer in question? In my opinion, that is what makes it a tax or a royalty.
Senator Forrestall: I cannot answer that question, senator.
As I look back to recent changes to the GST, it would cover such things as blank tapes. They are subject to tax.
Mr. Hétu: The manufacturer or the importer under that regime will have an additional cost -- the copyright payments added to the product he is selling in this country to a retailer. Obviously, the royalty or levy will find its way into the price that he will ask the retailers to pay.
Therefore, if, today, the GST applies to that price, then it will apply tomorrow to the revised price because there will be a revision of the price. That will not be on my shoulders. The person having to pay the royalty will behave in a particular fashion after that. That is an additional cost, and it will find its way somewhere.
Senator Forrestall: He will recover it as he passes it along. What assurance do we have that it will not come out of the royalty payable to our musician friends? It is not there; it is not dealt with; it is not clear.
Mr. Hétu: This is the Copyright Act, senator, not the Excise Tax Act.
Senator Forrestall: If anything were to be clear, it should be the Copyright Act. I had an objection to importing words which bothered me into a Canadian statute.
If the cassette only costs $1 dollar and the levy is $1, you then have to pay GST on $2. Out of whose pocket will that come?
Perhaps if there is an answer out there, Mr. Hétu, you might ask your legal counsel to send our Clerk a memo touching on it.
The Chair: Witnesses from the department will be here on our last day of hearings, which is April 21.
Senator Forrestall: That is not satisfactory. That is like the Clerk sending a notice after I have gone home.
The Chair: If Mr. Hétu wants to send us that information before then, we will be pleased to pass it along to you, senator.
Senator Maheu: Mr. Hétu, I should like to go back to the untraceble copyright issue. Is there any body of law which deals with the definition of "reasonable effort"?
Mr. Hétu: I am not sure I understand your question. I am sorry.
Senator Maheu: The bill states that "reasonable effort" is to be made to find the author or the rightful owner. From what you have said, I do not see that there is any body of law which deals with that issue. Have you ever had any cases of untraceble copyright owners before your board?
Mr. Hétu: Yes.
Senator Maheu: I thought I understood you to say that you had never had such a case.
Mr. Hétu: I mentioned that we had never had a case in which a library was asking us to issue licences for their own benefit as users because they could not locate the copyright owner. The typical case we get is rather from a teacher who needs to reproduce certain poems or drawings, for example, for distribution in the class and the author of the work cannot be located. The economic value of that reproduction is not significant. However, the teacher does not want to use the work without permission. The permission cannot be obtained because the copyright owner cannot be located. It would cost a fortune to try to find the person. A remedy in the act allows that user to come to the board to seek authorization to do what that person would not be entitled to do otherwise without infringing copyright.
Senator Maheu: "Reasonable" must be defined somewhere.
Mr. Hétu: Yes. Again, it varies from case to case, as I indicated. I could leave with you a description of the regime which is applicable to the copyright owner who cannot be located. We indicate to whoever wants to apply to us what it is that they should check first in terms of the work and its intended use. We ask the following questions: Has the work been published? Do you intend to use the work outside Canada? Are the copyright owners' interests for your intended use of the work administered by a licensing body? Have you done everything you can to find a copyright owner? We then ask them to describe to us what it is that they have done. After looking at that, we make our judgment as to whether it was sufficient for the particular use requested.
[Translation]
The Chair: If you could leave us a copy, we would make photocopies for the senators. Are there any other questions? Thank you very much. If other questions come to mind, we might get in touch with you again.
The meeting stands adjourned.