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Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce

Issue 23 - Evidence


OTTAWA, Thursday, June 21, 2012

The Standing Senate Committee on Banking, Trade and Commerce, to which was referred Bill C-11, An Act to amend the Copyright Act, met this day at 4 p.m. to give consideration to the bill.

Senator Irving Gerstein (Chair) in the chair.

[English]

The Chair: Senators, this afternoon the Senate referred Bill C-11, An Act to amend the Copyright Act, to this committee for its examination.

To start off this study, we are very pleased to welcome two ministers responsible for this legislation: the Honourable Christian Paradis, Minister of Industry, and the Honourable James Moore, Minister of Canadian Heritage and Official Languages. They are also accompanied by officials who will assist them in answering our questions.

Representing industry Canada, we welcome Anne-Marie Monteith, Director, Copyright and Trade-mark Policy Directorate; and Paul Halucha, Director General, Marketplace Framework Policy Branch.

Representing Canadian Heritage, we welcome Lara Taylor, Acting Director, Policy and Legislation, Copyright and International Trade Policy.

Due to the pending vote, we will take 42 minutes exactly, to 4:42 p.m., at which time we will suspend, go upstairs, vote as quickly as possible, and the ministers have indicated that they can remain with us until 5:15 p.m. As quickly as we can get back down, we can resume our discussions.

With that, ministers, the floor is yours.

[Translation]

The Honourable Christian Paradis, P.C., M.P., Minister of Industry: Honourable senators, my colleague, the Minister of Canadian Heritage, and I are pleased to have the opportunity to speak to you about Bill C-11, the Copyright Modernization Act.

In fulfillment of a 2011 Speech from the Throne commitment, our government is seeking swift passage of legislation to modernize Canada's copyright law in a way that balances the needs of creators and users. I think that balance is key.

They bill before you today does just that. Bill C-11 is a critical part of Canada's digital economy strategy. It will ensure that Canada has a modern copyright regime that protects and helps create jobs.

The regime will foster innovation and attract new investment to Canada. It will enhance our ability to compete in the global digital economy. The bill provides clearer rules that will enable all Canadians to fully participate in the digital economy, now and into the future.

Bill C-11 includes provisions that support software innovation and the rolling out of new digital products and services. For instance, it will pave the way for greater adoption of cloud computing and network personal video recorder services.

Our government recognizes the important role that intermediaries play in the digital environment. This is why the bill includes safe-harbour provisions and clarifies Internet service providers' obligations in terms of combating online piracy.

[English]

Bill C-11 is forward-looking legislation that responds to a dynamic and ever-changing digital world, and it will bring Canada in line with international standards.

Mr. Chair, I would like to take this opportunity to speak briefly about the extensive consultations that have informed Bill C-11.

Back in 2009, broad consultations on copyright reform were launched. The response to the consultations was remarkable. More than 8,000 written submissions were received and hundreds of individuals and organizations participated in live events held across the country. Our government considered everything Canadians had to say and we responded by introducing the copyright modernization bill first as Bill C-32 in the previous Parliament and then as Bill C-11 in the current Parliament.

We have continued to listen to the views of Canadians. The legislative committee that studied Bill C-32 heard from over 100 witnesses. The more recent legislative committee studying Bill C-11 picked up where the previous one left off. The committee carefully considered all previous input. It also heard from approximately 40 witnesses. The committee also undertook a clause-by-clause review of the bill and adopted a number of amendments that clarified certain provisions of the bill.

We are now on the verge of providing Canadians with copyright legislation that is modern, flexible and fair, legislation that balances the interests of all of the groups we heard from.

[Translation]

I now yield the floor to my colleague, the Minister of Canadian Heritage, whom I would like to thank for his amazing work. I also want to thank my predecessor, the President of the Treasury Board. They both worked on this bill in the previous Parliament. The Minister of Canadian Heritage has been acting as institutional memory because of his participation in bills C-32 and C-11 from the outset. Therefore, I want to use this opportunity to thank him publically.

The Honourable James Moore, P.C., M.P., Minister of Canadian Heritage and Official Languages: Thank you very much, Mr. Paradis.

[English]

I would like to take this opportunity to talk about Bill C-11.

[Translation]

I would like to take a moment to explain to you why our government has made the modernization of Canada's copyright regime a priority.

[English]

Canadians today have fully embraced the opportunities that we have in this country to create and to innovate, and to do it with the latest and greatest technology. However, our copyrighted material and the way in which we treat it has been terribly outdated for some time.

As my colleague just mentioned, Canadians spoke during the consultations that we had across the country and we listened.

[Translation]

The result — Bill C-11 before us today — is the product of the most comprehensive effort to modernize our copyright laws that we have seen in over a decade.

This bill is flexible, balanced and in line with international standards. It is an ideal approach for creating jobs and promoting tomorrow's new technologies.

[English]

The bill that we have now is balanced and it is responsible. It speaks directly to the needs of artists and to consumers as well. It is in the best interests of all Canadians.

This legislation will strengthen our ability to compete in the global and digital economies. It will protect and create jobs, promote innovation and attract new investment to Canada.

The contribution of the digital economy to Canada's overall economy cannot be understated. Indeed, it comprises in total 5 per cent of Canada's GDP. That is nearly $50 billion in direct economic impact for Canadian industries and nearly 1 million jobs across the country. It is essential that we protect these jobs and industries that are critical to Canada's economic success.

[Translation]

Digital technologies drive the Canadian economy and create jobs. For example, the entertainment software industry contributes more than $1.7 billion annually to Canada's economy. Over 350 game-development companies employ more than 16,000 people across Canada.

[English]

In Canada's film and television industry, over 128,000 jobs from coast to coast are involved in the industry, an industry whose worth is about $5.5 billion. These jobs are important and, as a government, we are committed to ensuring that these creators have the protections and laws that they need to thrive.

A critical element of this bill is a requirement that Parliament revisit the Copyright Act every five years. We did this to ensure that future parliaments and governments will not forget about the important role that a modern and updated copyright law plays in our economy. Technology continues to evolve rapidly. New devices and products are entering the market constantly, and it is important that our copyright legislation can respond to this evolving digital environment.

Our government has anticipated this and we are confident that this proposed legislation will accommodate future challenges. Let us be clear: This is the most comprehensive effort to modernize our copyright laws that we have seen in well over a decade. It is widely supported by creator groups, consumer groups and businesses that drive Canada's economy.

[Translation]

Canadians deserve strong copyright laws to protect our digital industries. Such laws have already been passed in the United States and throughout Europe.

[English]

Bill C-11 is about common sense. It will make our copyright laws forward-looking and flexible. Our government is committed to taking the right steps to create jobs and spur the technologies of tomorrow.

It has been a long road to get to where we are today, to arrive at this legislation. I want to thank all those who work in the department, members of Parliament, all members of the Senate who have contributed to the discussions around this, and the thousands of Canadians who participated in our consultations. I greatly appreciate their involvement.

The process we have used to arrive at this legislation described by Minister Paradis, which is indeed a balance of all the interests, has been widely and well received by individual Canadians and organizations across the country. I will give a sampling of the support this legislation has received.

The International Alliance of Theatrical Stage Employees says:

We applaud the government's move forward with Bill C-11. This bill will keep over 16,000 workers in Canada's entertainment industry employed. Piracy is taking money out of our workers' pockets. Canada needs copyright legislation that will protect and create jobs, stimulate the economy and attract new investment.

It is not just those who work in these direct industries but those who deal with copyright material every single day. The Council of Ministers of Education, the ministers of education of every single provincial government except for the Province of Quebec, has endorsed this legislation. They say, "This legislation provides the clarity we have been looking for."

Student organizations also support this legislation. The Canadian Alliance of Student Associations has come out and said the government has demonstrated their commitment to Canada's education community. "Students across Canada are greatly encouraged" by this legislation.

This is about balance. There are large numbers of organizations that understand that and that recognize that the compromise we have arrived at Bill C-11 is what is in the best interests of Canada.

With that, ladies and gentlemen, we will be pleased to take your questions.

The Chair: Thank you for your opening comments. I will ask senators to limit themselves to five minutes each.

[Translation]

Senator Massicotte: Thank you for joining us today. This bill is technical and fairly complicated, and that explains why we have been discussing it on Parliament Hill for two years.

We have received letters and comments from many people. Things are not clear for some of them. Since we are talking about some $20 million less, are there any changes in the bill before us compared with the current bill when it comes to artists' royalties in terms of broadcasting and other sectors? Where is the exact situation?

Mr. Moore: There are no changes in the bill compared with the current regime. We have also received many comments during our consultations.

Senator Massicotte: Are artists receiving as much money as they would have received under the old legislation?

Mr. Moore: There have been no changes.

Senator Massicotte: We have agreements with international organizations and obligations toward their member countries. As for the proposed patents, standard formats are probably used. Are all international obligations in line with those in the United States, England, Australia or elsewhere?

Mr. Paradis: Absolutely. You have the treaty signed based on the agreement with the World Intellectual Property Organization. By passing this bill, Canada will be adhering to the treaty.

Senator Massicotte: So our approach is not significantly different from those in England or Australia, for instance?

Mr. Paradis: The bill meets WIPO's international standards.

Mr. Moore: There are differences between our approach and the American approach, for instance. The United States have a different approach because of their system, their policies and their understanding of consumer and industry needs. Canada signed WIPO's Internet treaties several years ago. If this bill is passed, we will have the opportunity to really impose the WIPO Internet treaties.

Senator Massicotte: People can use devices like the iPad, by Apple, to download music, movies and many other things. Do artists receive their royalties from Apple when their creations are downloaded?

Mr. Moore: Yes they do because people sign a contact with Apple to be able to use iTunes and download content. The royalty is covered by an agreement between the artist and the company. That agreement can be negotiated by the artist.

Senator Massicotte: There is no problem. Are artists paid accordingly?

Mr. Moore: Based on that example, it is up to the artist and Apple to negotiate the royalty to be paid to the artist.

Mr. Paradis: This is the new reality. We want to make the bill compatible with technological advancements. These tools are expected to provide the mechanism for respecting copyrights, but the author and Apple negotiate the actual agreement.

Mr. Moore: What affects our artists the most is not the royalty issue — which is no doubt significant — but piracy. This bill will make piracy illegal in Canada.

Senator Massicotte: Are the artists satisfied with the bill?

Mr. Moore: There are different opinions out there. We need a balanced bill. It has been perceived in various ways. The bill contains eight or nine major parts on intellectual property. Everyone benefits from this bill. Of course, no one is 100 per cent satisfied, but no one is left out in the cold either.

Everyone benefits from this bill, but there are certainly some artists who want something else. We understand that. That is why we are having a debate and why the last part of our bill contains a formula for the future in order to ensure that the debate does not end with the passing of Bill C-11, but that the law continues to adapt to new technologies, new demands and new perceptions of needs and rights in terms of intellectual property.

This certainly kick-starts a new regime that takes our artists' needs into consideration.

[English]

Senator Tkachuk: I received a number of emails on this bill and quite a few of them are from publishers in education. There are concerned about the ability of schools or universities to make copies of texts. Could you tell me exactly how the government approached this problem and what the real truth is, because I am not quite sure?

Mr. Moore: I am sure Ms. Taylor will go into the technical specifics of the bill in terms of how we deal with material and the term of use in the legislation. In the consultations we did, we engaged with student organizations, educational book publishers, ministers of education and the unions that represent the teachers who rely on these.

We wanted to ensure we did have a balanced approach. We do have a formula within the legislation with regard to digital copies. Keep in mind that this is a closed market in a lot of ways. It is a closed market of the number of people who will buy specific kinds of books, such as educational textbooks in a certain field. If someone creates a book in a digital format and distributes it to classmates without the proper compensation given to the those who created the contents, the market for that, limited as it may be, completely implodes.

We have put forward in the legislation the ability for those who are creating educational texts to be able to still earn a living while doing so. Otherwise, the market collapses; it is a fragile market as it is. Therefore, we have put in place provisions so that those kinds of digital texts will not be able to be transferred from student to student, from year to year. It is the responsibility for us to create somewhat of a protected market for those who create educational materials.

Senator Tkachuk: Can you answer the question so people who might be watching this on TV can understand it better? For example, I do not think that I am digitally illiterate, but if it is a digital text and I am a teacher in a classroom, can I make copies for my students in that particular year? I am talking about the future but for that year. Does each student have to buy the text as they normally would if it was, say, a history class? If it is a text, a volume or a book — not a piece of digital equipment but a book — can a teacher make copies for students for that particular year?

Mr. Moore: The short answer is that it is up to the person who has created the text.

Senator Massicotte: The answer is no.

Mr. Moore: It empowers the writer. For example, if this is a classroom with 20 students, you would not want someone to invest hours and hours, if not weeks and months, of their time to create one textbook only to have someone drop $30 to buy one and then digitally share it with everyone in the room. The market collapses.

Those are the provisions that protect this book, so no, you cannot buy one textbook and share it with the world.

Senator Tkachuk: Can you buy a textbook that is not digital and print it and distribute it to your kids? Can you take huge sections of it and distribute it to the people in the classroom?

Mr. Moore: You can with the consent of the author.

Senator Moore: Thank you, witnesses, for being here.

First, why are two ministers here and what do each of you have to do with this particular bill?

Mr. Moore: One plus one equals three sometimes.

The truth is, we have taken an approach and learned from the past, from both governing parties. People need to understand that the legislation is a balancing act both in terms of perception and reality. If the minister responsible for culture is the sole minister responsible for the bill, people will ask whether it is balanced in terms of all the interests that are out there. If the Minister of Industry takes it, then will cultural groups be listened to and understood? There is a balancing act required. It is not uncommon.

Senator Moore: I understand your role, minister, as the minister of culture, and I hope you are like me, batting for the creators here, but I do not understand where the Minister of Industry fits in.

Mr. Moore: The Copyright Act is the legislative responsibility of the Minister of Industry.

Senator Moore: However, you are the main proponent of the interests of people who are protected by the act.

Mr. Paradis: The Copyright Board and other organizations fall under the Minister of Industry, as well as the consumer and the industry aspects. Of course, the Minister of Heritage is there for the cultural aspect, but you have all the industry and consumer aspects.

Senator Moore: Senator Massicotte asked about our international obligations. The Canadian Library Association has this position on this bill:

The prohibitions on the circumvention of digital locks in Bill C-11 exceed Canada's obligations under WIPO copyright treaties.

Bill C-11 gives a new right to copyright owners negating the flexibilities in the Internet Treaties and directly contravening the basic, longstanding individual rights sanctioned in Canadian copyright law.

They are saying we have gone beyond what we have to do to be in compliance. What do you have to say about that?

Mr. Moore: We would disagree. There is an argument out there about the importance of digital locks at all, but again, perspective matters. You think about the organization. Their perspective is they would like to have as few digital locks as possible. As librarians, they want to have as much content as possible and circulate as much content as possible, as do all the people who are members of the association. They want to have as much content as possible and move it around. I understand that their perspective would be to have few digital locks.

However, I can tell you that those who write the books and are the creators of the content they are circulating wish our digital locks provisions were more aggressive. It is a question of balance. I appreciate their perspective, and we took it into consideration in drafting this bill, but we have arrived at what we think is a compromise. We are not dictated to by the WIPO treaties. We take our obligation seriously to implement the WIPO treaties and use them as a guide mark, but the way in which we have put forward our obligations here and this proposal in Bill C-11 to protect people's right to protect themselves with digital locks is the Canadian solution.

Senator Moore: Minister, it is not like the libraries have open season and can voluminously copy however they may choose. They, too, are governed by the Supreme Court of Canada CCH case which is pretty clear.

Mr. Moore: Some wish to do so. Look, for example, at the aggressiveness that Google has taken with regard to freely circulating books, often without the consent of those who write those books. The libraries in this country are without question operating in good faith, but without the protections there, it is not the libraries we are worried about.

Senator Moore: I am against piracy of intellectual property rights. Everybody in this room is, I am sure, but the key to the whole piece of legislation is the digital locks. It trumps everything else. As you go through and analyze it all, there is no question that is the fundamental thing here.

You mentioned Google. Are you familiar with the study that Rice and Duke Universities did last year on this?

Mr. Moore: Refresh my memory.

The Chair: I will ask you to ask the question and put you down for the second round. We have almost finished the five minutes.

Senator Moore: Okay.

They did a study showing that digital locks do not operate the way you would like to see them operate. In fact, they have gone the other way. Steven Jobs asked why the big four music companies would let Apple and others distribute their music without using digital rights management. He said:

The simplest answer is that DRMs haven't worked, and may never work, to halt music piracy.

What do you have to say about that?

Mr. Moore: What year did Steve Jobs say that?

Senator Moore: Last year in the study, 2011.

Mr. Moore: I do not think there are many artists who would say that iTunes is not an exact model of what digital locks look like for the dissemination of entertainment content.

Senator Moore: That is what Steven Jobs said in connection with that study.

Mr. Moore: He may be disagreeing with something from which Apple has profited mightily from.

Senator Ringuette: I am very grateful that both of you are here. I want to know how many agreements we have in Canada between the creators and the digital service providers now.

Mr. Moore: How many total? There are hundreds of thousands if you think of every single song and book.

Senator Ringuette: Each individual creator has to come to an agreement with the digital service provider?

Mr. Moore: Sure. Your publisher would enter into a contract. Using the Apple example, if you wanted to have a book that was available on iTunes for digital content, you and your book publisher would enter into a contractual agreement and have the parameters about that, including the extent to which digital locks would be applied or not and terms of use and all that. That is what this legislation is about.

"Digital locks," by the way, is a very tight title. It basically empowers those who invest thousands of dollars and thousands of hours into creations — video games, software, books, magazines, whatever it is — and gives them the tools to protect themselves from those who would steal from them with a keyboard. That is what it is.

Senator Moore: We understand that.

Senator Ringuette: Yes. Earlier you said this bill will provide for the service providers to negotiate with the creators.

Mr. Moore: Correct.

Senator Ringuette: That would only happen because of the digital lock that you are talking about?

Mr. Moore: No, those contractual relationships between publisher and distributor exist already. This provides clarity. Also, if you are asking within the context of digital locks, it provides creators with the protection from those who would steal from them. In other words, the breaking of the lock itself is a crime.

Senator Ringuette: How do we know that Apple and Google will negotiate with the creators of books, of music, of games, of movies? How can we be certain that they will do that for Canadian creators?

Mr. Moore: The market kind of leads to that.

Senator Ringuette: How will the market lead to that?

Mr. Moore: If I want a book, I have to get it from somewhere, right?

Senator Ringuette: Yes, but if you get it from Apple and Apple does not have an agreement with the creator of that book, how will that work?

Mr. Paradis: Then they will not have a book.

Mr. Moore: There is a symbiotic relationship, a mutual interest. I write a book; I want it sold. I know how to write it; the publisher knows how to create it; Apple knows how to sell it. It is a win-win-win, and the consumer walks in.

Senator Ringuette: I talk with a lot of young people, and they seem to be able to bypass any kind of lock you put onto different digital service providers that have no agreement. My basic question is the following: How do you make sure that in this legislation there is an obligation for all digital service providers to have agreements with Canadian creators?

Mr. Moore: I do not believe enforcing any distributor to — I think I get what you are trying to get at here, maybe in a different way. When Bill C-11 passes, there will be clarity of law. Maybe we should leave it at that.

Senator Ringuette: We will see.

[Translation]

Senator Hervieux-Payette: My first question is for Mr. Paradis. How many amendments that respond specifically to Quebec's concerns has the House of Commons made to the bill?

Mr. Paradis: First, Bill C-11 was introduced as it was in the previous Parliament under Bill C-32. I believe that nine or ten amendments have been proposed since.

Mr. Moore: There have been 11 amendments.

Senator Hervieux-Payette: Are we talking about Bill C-11?

Mr. Paradis: Yes. Eleven amendments have been made to Bill C-11 in the House of Commons.

Senator Hervieux-Payette: Have any amendments been made following the Government of Quebec's requests regarding education?

Mr. Paradis: There have been no amendments in education. The amendments have been made in order to make the bill more practical for technological and other purposes. However, there have been no substantive amendments in terms of education. The bill has remained as it was under Bill C-32.

Senator Hervieux-Payette: Associations representing over 50,000 creators from Quebec will be hit hard by the passing of this bill. I will not name them all, but they include associations of authors and performing arts professionals, and the Association québécoise des auteurs dramatiques — Quebec's playwright association.

Mr. Paradis: Are you still talking about education?

Senator Hervieux-Payette: Yes. Actually, when it comes to education, the issue has to do with the use of productions, either in terms of audiovisual or written material. Today, all material can be technological; even if it is written, it can become technological.

Another group told me the same thing:

[English]

If Bill C-11 is not changed, Canadian jobs will be lost and educational films with Canadian content will be put in jeopardy.

[Translation]

We are talking about experts who work in that area. You understand that, as a senator, I have a duty to take their concerns seriously. Those people are there to protect their clients' interest. They have been visiting us to say that those issues have not been resolved in the House of Commons and that they have faith in us because the Senate is the house of sober second thought.

Why would the request made by the Government of Quebec — which disagrees with the exception of fair dealing in education, as there is no pay mechanism — result in artists losing income? They will be receiving $40 million less in income, $25 million of which is lost to the screening of films by educational institutions.

Quebec has a system, which was working, and this bill will make it so this whole issue can no longer be managed through that mechanism. One class may have about 25 students and one creator, but there are hundreds of classes across Quebec. Educational institutions' willingness and obligations have no impact on the federal budget; the provinces are the ones directly affected.

So, why has this issue not been resolved to the satisfaction of a province for whom all that media — in terms of culture, language — is a key aspect?

Mr. Paradis: Your question is multi-faceted. The $40 million you are talking about is for the whole country. As for the Council of Ministers of Education of all provinces and territories, they all agree the total is below that amount.

Based on that premise, I sat down with my Quebec counterparts, including Christine Saint-Pierre. Since I take this issue seriously, I asked my department to compare the figures, and the impact is minimal.

I do not agree with the $25 million amount, as that is not the figure we arrived at. During our discussions with Quebec, their representatives did not show us that there would be such a large difference. We should not lose sight of the fact that the fair dealing provision contains strict criteria that forbid the reproduction of complete works. Some criteria obviously have to be established so that this does not hurt the market.

In short, the criteria are not as broad as the province has implied. I can tell you that discussions have been held with Quebec, and nothing is preventing the organization that collects royalties in Quebec from taking over if it feels that royalties are being lost. An in-depth analysis of the figures would be needed to determine whether royalties are being lost. As I said, a constant dialogue has taken place between myself, Minister Saint-Pierre and my colleague next to me, and we have never been shown such significant figures.

Senator Hervieux-Payette: You are saying that no in-depth studies have been conducted by you or them?

Mr. Paradis: My department has conducted some such studies. However, we are not prepared to say that there will be a considerable impact. I recognize the fact that there is an agreement within the Council of Ministers of Education, with the exception of Quebec. That is why I have paid special attention to this issue.

However, I put some figures forward in the discussions I have had. We have compared those figures, and Quebec's representatives could not show me that the numbers we had — which had a much smaller impact than you indicated today — were inaccurate.

I think that we have a clause here that protects creators. It has to be implemented. In any case, as a legislative review is conducted every five years, nothing is preventing us from analyzing the consequences. However, at this time, in the wake a meticulous and detailed study, we have not been shown that there would be considerable impacts as stated.

Senator Hervieux-Payette: Your colleague told us earlier about balancing the application of the bill between users and creators. Quebec does not seem to agree with your theory.

You said earlier that we would comply with all the treaties — the World Intellectual Property Organization treaties and copyright treaties. We were told that those treaties came into force in 2002.

[English]

The Chair: Senator Hervieux-Payette, can I ask you to ask your question? We have Senator Harb to follow.

[Translation]

Senator Hervieux-Payette: Canada signed them in 1987 and did not ratify them. Could you tell me whether those treaties have been ratified since?

Mr. Paradis: By passing the bill, we will adhere to the treaty. As I said, there have been discussions with Quebec on that very topic, and the province's representatives agree. They told us that, in terms of the iPod tax, for instance, they understood that was not where Canadians wanted to be. When we talk about a balanced approach, we are actually talking about protecting both creators and consumers through an approach that complies with the treaties we are committed to through the World Intellectual Property Organization.

Mr. Moore: It was signed by the former government, but we will ratify it.

[English]

Senator Harb: Thank you, ministers, for appearing here. Perhaps you could go to clause 47 of Bill C-11 dealing with the definition of "technological protection measures and rights management information."

My question concerns the notion of defining "circumvent." The way it is defined in the bill is:

(a) in respect of a technological protection measure within the meaning of paragraph (a) of the definition "technological protection measure", to descramble a scrambled work or decrypt an encrypted work or to otherwise avoid, bypass, remove, deactivate or impair the technological protection measure, unless it is done with the authority of the copyright owner; and

The bill goes on in paragraph (b) to talk further about it.

Who came up with this definition? How well tested was this in order to make sure that when we say someone has circumvented, we mean that person has circumvented and passed the test?

Mr. Moore: I will let Ms. Taylor talk about the circumvention, but I will talk about the process.

In our consultations, we used Bill C-61, the previous copyright legislation, as the starting point. We did consultations, as was mentioned. We heard from organizations all across the country, as well as individual Canadians, who gave us feedback on this. We sat down with our departments. Industry wrote the bill in partnership with Canadian Heritage. We wrote the bill and arrived at the language based on legal advice as to what best met the standard to actually protect people.

To make it as simple as possible, the essence of it is this: If you own a physical business and within that business is your intellectual property, and you put a lock on the outside door because you do not want people going in there and having access to the products inside the store without your consent, this makes it illegal for someone to break the padlock on the outside of the door of your business and go in.

Senator Harb: That will be elaborated on when you come up with the regulations, to say exactly what you just said?

Mr. Moore: Correct.

The Chair: I will suspend at this point. When we get back, the ministers have been kind enough to indicate they will be here until 5:15.

(The committee suspended.)

——————

(The committee resumed.)

The Chair: Thank you, ministers, for staying. We now turn to Senator Maltais.

[Translation]

Senator Maltais: Welcome, ministers, and thank you for being here. I have a question, but it is of a very strategic importance for all of Quebec — be it for authors or education.

Ministers, could you explain exactly how Bill C-11 will supposedly harm the education sector? We have read so many news articles and received a number of emails predicting a disaster. The Second World War was small potatoes compared to this. A solid explanation should be provided publically, and I am giving you the opportunity to do that today.

Mr. Paradis: I will begin by explaining how this will actually help education. The idea behind the bill is to finally usher us into the 21st century. The legislation contains archaic words like "overhead projector". Those are educational tools were used decades ago.

There is the matter of fair dealing we discussed earlier. Obviously, fair dealing has strict criteria, and nothing allows anyone to reproduce a work, a whole novel or something like that. They are only allowed to reproduce small parts for strictly educational purposes. For instance, in the case a book chapter or an excerpt from a poem, the criteria are already well-established by the Supreme Court.

Six strict criteria are considered, and they are the following: the purpose of use; the nature of use; the extent of use; the alternatives; the nature of the work; and the impact of use on the work. So it is very limited. However, there are also exceptions that are listed voluntarily in order to, once again, reach the 21st century.

We know that documents — such as photographs — are available on the Internet. If a student wants to use a photograph in their work, pictures are already available to the public on the Internet. When it comes to that — and this may partially answer a question asked by Senator Ringuette — Internet service providers will also have some responsibility. This is a technical amendment that was made specifically to respond to that issue. Internet service providers do not necessarily have a responsibility. However, if we see that illegal information is exchanged knowingly, we will establish a civil liability, which may be unlimited if we decide on legal action. If, for instance, there is a very wide online broadcast of content — out of all proportion — it will be possible to take legal action based on the pre-established damages. Therefore, some responsibility is involved.

Online learning is another exception. For instance, if the idea is to provide courses for students in Nunavut, telecommunications are technological tools that exist today and must be legally clarified.

In addition, educational material is distributed digitally. Think back to the time when we went to university and practically had to bring a cart for all the handouts. Today, you can buy them online, and you are allowed to print them once. The same goes for digital loans at the library. If it is printed on paper, it can be provided digitally.

Of course, there is always a counterbalance to that. If a digital work is accessed through a library loan or something like that, people cannot keep the file for as long as they want and cannot duplicate it either. So there are technological means to ensure that the file is eliminated after 30 days or that it cannot be copied.

In short, this is a good thing for education. It provides people with access to more information based on the 21st century technological tools. Once again, I do not agree with the figures provided in terms of potential costs. My department has conducted the necessary studies, and they were compared with those put forward by various stakeholders. It was never shown that those figures were justified. Our figures were frankly much more justified.

I think we will move forward with this bill confidently and enthusiastically. That will enable our educational institutions to optimize the tools they currently have at their disposal in this 21st century digital era.

[English]

The Chair: That completes round one. We have three supplementary questioners, so we will have to keep it tight. Next is Senator Massicotte.

[Translation]

Senator Massicotte: Listening to your explanations and reading the bill makes us realize that there are many measures in place, and I think that there are many benefits. We have done our part to try to curb abuse or unauthorized copying. What do you really expect from the bill over a five-year period? Technology is moving so fast. Many people are currently making illegal copies. You are saying that copies cannot be made, but those people at home are making four, five copies. That is a widespread practice right now. Do you really think that the bill, even though it modernizes laws, will change the habits of young people today who are making unauthorized copies?

Mr. Paradis: That is this bill's challenge. Things have been at a standstill for years. The latest amendments were made back in 1997, and they were not as extensive as those we are making today.

In addition, when changes were made during the 1980s, we were in the era of VHS tapes and similar technologies. We have done things the right way by consulting 8,000 stakeholders, trying to come up with the most balanced approach and developing a framework that makes broad coverage possible. That is why a mandatory legislative review is scheduled every five years to help us keep up.

In terms of regulations, certain powers will be included. If we see there are impacts in terms of competition in digital locks or other things, we can always use levers eventually. However, I think that, at this time, we really have the most balanced vehicle to help us plunge into and finally enter the 21st century era with the constraints we have.

There are some exceptions. Yes, people may have access to various tools that were not previously available, but there are also constraints.

Senator Massicotte: Legally speaking, I understand and I am relatively satisfied. However, in terms of the reality, the Government of Quebec has made announcements through artists — who are fairly close to young people — to try to educate them about the consequences of their unauthorized publications. Has that initiative had an impact? Have all those measures resulted in an increase in moral awareness? I am under the impression that the answer is no.

Mr. Moore: There have been some consequences, but what we want to do with Bill C-11 is not control people's personal choices, but provide clear rules to consumers, and thereby provide creators with tools to protect themselves against those who steal their work. That is what this bill is for. We want to have standards when it comes to consumers' needs and creators' rights.

[English]

Senator Moore: Minister Moore, you mentioned that CASA supported this. CASA representatives came to see me and they do not. They are very concerned about the copyright access fees that will be passed on to universities and then downloaded to them. We have conflicting stories here about student support. I do not think it is as clear as what you are saying.

Mr. Moore: No, as I said at the beginning, there are large issues with regard to legislation like this, and they wanted amendments. They sought amendments, no question, but that does not mean that there were not parts of the bill they did like, and the elements they did like related directly to the educational provisions of the bill, which they did support. There were other parts of the bill they sought amendments to.

There are all kinds of organizations. As I said, there are eight or nine large issues that relate to this legislation, high-level issues, such as fair dealing, digital locks, WIPO treaty and piracy. Every organization out there had all kinds of different positions on all of these different issues. There is not a clear left-right divide or a clear centralization-decentralization divide. People had all kinds of different positions on these different issues.

I do not think this is being too charitable to say, but every organization out there had two, three, four or five wins out of the nine big issues. No one had nine and no one had zero. Everybody sought nine and made sure they did not get zero. People sought amendments, but that does not mean they were necessarily unsatisfied with the final bill or that elements of the bill did not speak to their concerns and hopes of what this legislation would look like.

Senator Moore: You mentioned you were supportive of the creators and so on, which I am glad to hear, but under this bill, the ephemeral rights disappear. It currently pays $21 million to the creators of music and so on. It is in the hands of radio stations.

When I look at that versus the $1.4 billion of general revenues in that industry, why would that be taken out? It is not a large sum of money versus the revenues in that industry.

Mr. Moore: It was not an easy decision. It was one of those issues that falls under the headline of "balance." We tried to gain balance. With respect to ephemeral rights, I know there are a lot of organizations, particularly music publishers and Music Canada and others, who were quite upset with that part of the bill.

However, on the other hand, there were local radio stations that were very pleased by the fact that they are paying this and it would help them, many of whom are in difficult circumstances to stay on the air. It was a question of balance.

Again, as I said to your colleague with regard to libraries, it depends on where you stand and your sense of perspective. We think this is the right balance. On the other hand, we also think the biggest threat to music publishers and to creators in this country is not the question of ephemeral rights, yes or no; it is the question of piracy and whether or not Canada will protect our creators.

Senator Moore: Well, it all comes down to the use that copying is put to, really.

Mr. Moore: On the other hand, though, with respect, bring forward the Canadian Association of Broadcasters and those who represent local small-town radio and ask them what the changes in Bill C-11 mean to them and their ability to keep their local radio stations moving forward. It matters a lot to them.

Senator Moore: How do you balance, minister, that with the artist? There is $20 million disappearing from them. One side is getting it all.

Mr. Moore: They do not argue that. I can tell you, if you bring them before the committee, they will not argue that.

On the other side, for example, Rogers, which owns a lot of the radio stations in the country, because of the notice regime we have in the legislation, those same organizations now have to be part of the enforcement mechanism. Frankly, a lot of them do not wish to have that. Again, it is give and take.

You asked what we are doing for musicians and those who actually create the music to help them. Then you have to back up from Bill C-11 and take this into context, which is: What are we doing entirely as a government to support our music industry? We have the Canada Music Fund, for example, where we have locked in five years of funding. It was recession-proof so that all the money we have for the funding of the creation of music in Canada is protected.

Senator Moore: Are you replacing the $21 million somewhere else?

Mr. Moore: No, it is not that simple. Also look for example at the Canada Council for the Arts. We have increased their budget by 20 per cent, $181 million per year. You have to look at the entire ecosystem of what we do for the arts and not just look at Bill C-11.

The Chair: Minister Moore, I have to interject and take a final question from the deputy chair of the committee, Senator Hervieux-Payette.

[Translation]

Senator Hervieux-Payette: I want to come back to the balance between who does what and who receives what benefit. A group called Audio Ciné Films Inc. or Criterion Films is saying that they represent 500 Canadian companies and receive no funding from the government.

Every year, they generate between $30 million and $50 million. They employ 8,000 Canadians. They were very satisfied with the previous system. I am at a loss. You have an expression in English, "if it ain't broke don't fix it." When something is working, the people from the education sector write us to say that a change will have a negative effect, especially since their product is mostly in the area of education — the industry's small and medium companies. All those people ask for is our protection. They had a system in place that was working, and your bill changes the rules of the game and makes them harmful to their interests. I am wondering why.

Mr. Paradis: Once again, when it comes to education, senator — at the risk of repeating myself — we have really held thorough discussions with Quebec, both at the administrative level — be it through the Department of Industry, the Department of Culture, Canadian Heritage — and at the political level. And every time they provided us with information, they came up with random figures, which I think were exaggerated. The losses various stakeholders are talking about are exaggerated, and I really asked that we sit down together. Various administrations have exchanged letters.

Once again, we think this is a viable system. Quebec still has its organization, which is also free to collect royalties for the artists in question if the situation is as serious as they claim. That is why a legislative review will be conducted. Once again, we have to move forward because, if we look at the Association des collèges et des universités, even in Quebec, they are very clearly saying that they agree with this because it will help them optimize their current tools and the technological methods to finally usher in the 21st century.

Senator Hervieux-Payette: When things are free, I do not know many people who would say they are happy to pay and will continue to pay even if they do not have to. Minister, there is some income; school boards do pay.

Mr. Paradis: When it comes to colleges and universities, I want us to stop talking about overhead projectors and similar things, and to start legislating in terms of current practices. Coming back once again to the figures, I do not agree with that theory, in light of what the federal government has shown me. We have met with the provincial government, which was unable to provide us with convincing answers. That is, once again, a typical example of the type of consultation we conduct across the country. It is a matter of balance, and we think that the best approach is to move forward in that direction.

Senator Hervieux-Payette: I was talking about the private sector. I wanted to be clear that I am not talking about the public sector. I am talking about private companies that use the Internet and digital formats. I just wanted to tell you that we are no longer talking about the same thing. What I am saying is that they are the ones who provide services. They had agreements that protected them. Educational institutions were taking advantage of that because the prices were beating the competition. At 50 cents per student per year, we cannot say Quebec school fees will not be affected, but at 50 cents, that effect may be reasonable.

[English]

The Chair: Thank you very much. The ministers have been very kind with their time.

Do you have a quick response, minister?

Mr. Moore: This is very large and complex legislation. I do appreciate the Senate sitting as you are and taking this bill into consideration. This has been a two-year marathon to get to where we are in this legislation. We recognize that intellectual property law is incredibly complicated and will be for the coming five years. We do not pretend to sit here in June 2012 and say this will be the perfect IP law for the next generation of Canadians. That is why we have built into this legislation a mandatory parliamentary review every five years so that, regardless of who the politicians are and regardless of who is in government, we have to make sure that our IP laws stay up to date.

Even with the proviso with education, I appreciate there is a debate with the Province of Quebec, and I understand that. However, we have 12 of 13 provinces and territories who are okay with this.

Ephemeral rights are an important issue. I do not discount the money issue for many of our artists, but if you take into context everything we are doing for culture, Music Canada, the biggest critics of us with respect to ephemeral rights are also the biggest supporters of the bill from the music industry side.

It is a question of balance. I understand there are a lot of organizations that would like to have tweaks. It is a zero sum game, and I think the balance we have works. If it does not, five years from now, regardless of the politics of this — it is an intense issue — we will be back here to talk about this on an ongoing basis because it is that important.

Say yes to the bill and say yes to a new regime where we will not forever be having this conversation to make sure we get these technical questions right.

The Chair: On behalf of all committee members, we thank you, ministers, for your time today. Thank you so much for staying while we went up to vote.

(The committee adjourned.)