Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce
Issue 23 - June 26, 2012 - morning meeting
OTTAWA, Tuesday, June 26, 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 9 a.m. to
give consideration to the bill.
Senator Irving Gerstein (Chair) in the chair.
The Chair: I call this meeting of the Standing Senate Committee on
Banking, Trade and Commerce to order. Last week the Senate referred Bill C-11,
An Act to amend the Copyright Act, to this committee for its examination. We
began our consideration shortly thereafter, hearing from the responsible
ministers, and then continued the study on Friday, hearing from seven panels of
interested stakeholders and experts in the field.
Today we will continue in that regard, hearing from a further three panels in
each of this morning and this afternoon.
In this first session we are pleased to welcome Lee Webster, Chair of the
Canadian Chamber of Commerce Intellectual Property Committee. Also joining us by
video conference from Winnipeg is Graham Henderson, President of Music Canada.
Colleagues, we have one hour for this session, and we will hear from Mr.
Henderson first, followed by Mr. Webster.
Graham Henderson, President, Music Canada: Good morning and thank you
for the opportunity to appear before you today, albeit virtually. I am here on
behalf of Music Canada, a trade association representing the major music
companies: Warner, EMI, Sony and Universal. These are the foreign direct
investors, if you will. They are headquartered in the Greater Toronto Area and
are part of an industry that, according to a recent study done by PWC, is
responsible for thousands of jobs throughout Canada. We market, nurture and
promote the artists and musicians who have and continue to put Canada on the
My background is long in the music industry. I have not always worked for an
association. For the first 13 or 14 years of my career I was actually an artist
representative representing some of Canada's best-known musicians, singers and
songwriters. After that, I went to Universal Music where, in addition to my
duties as their head of business affairs, I was also responsible for the
development of their digital businesses. I actually have hands-on experience in
building out the digital businesses that are starting to take root in our
Also, I am on the board of the Ontario Chamber of Commerce, and I see my
friend Lee Webster there in the room with you. I am the Vice-Chair of the
Canadian Intellectual Property Council, which is an arm of the Canadian Chamber
of Commerce. That is my background. Our industry is highly collaborative. My
members also support and work with dozens and dozens of domestic music companies
through distribution and marketing arrangements.
It is a privilege to speak to you about Bill C-11 in an effort to encourage
you to ensure its quick passage and progress into law. As you know, this bill
has been many, many years in the making, perhaps too long. It is not the first
but the fourth iteration of copyright reform and the fourth attempt to ratify
the World Intellectual Property Organization's Internet treaties, yet this is
the first of its kind to make it all the way to the Senate. In the time it has
taken us to debate this issue, it has had a catastrophic effect, the delay on
our business. Jobs have been lost; careers have been damaged, perhaps
First and foremost, I commend the government for its commitment and vision
and the considerable energy and attention it has devoted to this legislation.
The discussion thus far has featured mammoth, almost unprecedented, public
consultations. There were town halls, round tables, submissions electronically
and in writing. There was testimony by hundreds of witnesses, and the result in
our view is a balanced piece of legislation.
Please do not mistake me; I am not saying it is perfect, but I would invite
you to suggest to me whether there has ever been a perfect piece of legislation
passed in Canada or anywhere. It does not meet all of the needs of our
community. To quote Minister Moore, this is tough, technical, complicated stuff.
You will not please everyone.
The discourse has also featured — and I think this is particularly
unfortunate — an enormous amount of hyperbole and exaggeration, some of which
you have witnessed in previous testimony. It is almost like a Chicken Little
syndrome. The claims made about the legislation, some of the drastic and
terrible things that will happen contingent on its passage, are quite
extraordinary. I sometimes wonder whether the people who are saying these things
about the bill have even read it. In my few minutes before you, I want to try to
correct some of this misinformation, and then we will have lots of time for
First, there has been lots of discussion about technical protection measures,
or TPMs as they are called, and there have been claims made that they protect
outdated business models and that they are not in the best interest of
consumers. Nothing could be further from the truth. In fact, TPMs allow software
developers, for example, to offer 30-day free trials so consumers can test a
product before deciding whether or not to buy it. TPMs also allow Canadians to
download millions of electronic books from libraries. TPMs provide Netflix
subscribers in Canada, numbering well over a million, unlimited access to
subscription movies and TV shows.
A statement has been made about my business by a professor. He suggested we
do not need TMPs. Nothing could be further from the truth. Technical protection
measures offer my members and the creators that we work with the ability to
offer access to millions of songs through music subscription services such as
Rdio and Zeet at a fraction of the purchase price of the music. TPMs are an
enabler of business models that benefits consumers. They are so important to our
businesses and are why the WIPO treaties have provided help to prevent their
circumvention. Bill C-11 provides an appropriate protection for the TPMs as
required by the WIPO treaties.
You heard a professor say that Bill C-11 goes "far beyond what is necessary
in international law." In fact WIPO treaties require both: measures that
prohibit acts of circumvention, including prohibiting act of access control
circumvention, and measures that prohibit providing circumvention services and
trafficking in circumvention tools. According to one of the architects — in
fact, some people call this gentleman the father of WIPO treaties — Mihály
Ficsor, Bill C-11, and he has looked at it, meets the requirements. In a very
public discourse with Professor Geist, for example, Dr. Ficsor disagreed with
Professor Geist's interpretation of the TPM provisions.
Claims have also been made that many of the new exceptions established in
Bill C-11 are nullified by TPMs. For example, Professor Geist told the committee
that the exception for perceptually impaired individuals is ineffective, asking
the committee rhetorically, "Who would be against providing appropriate access
for the blind?" Yet the exception, permitting organizations like the CNIB to
circumvent a TPM on behalf of blind persons, has no qualifications whatsoever,
and you will see that in proposed section 41.16. There are even rights that
enable manufacturers and importers to supply the CNIB with circumvention tools.
The condition is subject to a single and very reasonable condition, that the
tool not do more than what is necessary to circumvent it for that purpose.
If that is not adequate, the bill goes further to permit the government to
pass regulations that would require owners of works to provide disabled peoples
with access to TPM-free works if there was ever a problem, and that is in
proposed paragraph 41.21(2)(b). The answer to Professor Geist's question,
then, is that no one would be against providing appropriate access for the
In concluding, Bill C-11 has been drafted, in my view, to meet the
government's objectives of protecting the creative industries, combatting
piracy, and encouraging productivity and innovation in Canada's vital creative
sector. As I said before, it is not perfect, but what is? We respect the extent
of deliberation that has taken place.
With its passage, the creative community looks forward to rebuilding our
marketplace, and we are committed to working with the government to identify any
issues that need to be addressed, mandated, in the mandated five-year review.
Let us remember that this is about jobs — jobs and careers.
Thank you. I am happy to answer any questions you may have.
The Chair: Thank you very much, Mr. Henderson.
Lee Webster, Chair, Intellectual Property Committee, Canadian Chamber of
Commerce: Good morning. My name is Lee Webster. I am a partner with the law
firm of Osler, Hoskin & Harcourt in Toronto. I am here today in my capacity as
Chair of the Intellectual Property Committee of the Canadian Chamber of
Commerce. I am also a member of the Canadian Intellectual Property Council.
The Canadian Intellectual Property Council, CIPC, is a Canadian business
coalition established in 2008 under the umbrella of the chamber. It was founded
to provide a central voice to press for stronger IP protection both in Canada
and worldwide. It represents a subset of Canadian members, including
pharmaceutical, software, entertainment and consumer goods companies.
My practice has focused on IP law for over 25 years, and I thank you on my
behalf and on behalf of the Canadian Chamber of Commerce for the opportunity
that you have given us and others to appear before this committee today.
As a personal observation, I am surprised — I guess perhaps pleasantly
surprised — to see that copyright reform has become such a hot and debated topic
in this country. It was not so long ago that the Copyright Act contained
references to long-dead technologies, such as perforated rolls, punched rolled
steel cylinders used in music boxes in the 1880s and 1890s, and it only took 100
years for those references to be removed from the act. I am pleased to see that
copyright reform is now moving at a quickened pace and that we may not have to
wait until 2085 to have our Copyright Act amended to address the Internet age.
It is virtually self-evident that copyright reform is long overdue. The
rollout of the Internet and the ease with which works — music, words, pictures —
can be digitized and replicated has severely challenged traditional distribution
models for information-based media. We are familiar with the decline in sales of
CDs and the challenges faced by the traditional recording industry. More
recently, similar challenges now confront the motion picture, newspaper and book
We now have before us Bill C-11, An Act to amend the Copyright Act. We are
here today to provide witness to this committee on how copyright reform should
be implemented to amend our laws to fit the digital age, the last somewhat major
reforms being implemented in the days when the greatest fear of music rights
holders was the copying of cassette tapes on dual tape recorders.
I would like to make a few points. Copyright reform presents a multitude of
issues upon which reasonable people can differ. There are many voices who loudly
— and now with the extended reach available through technologies such as
messaging, blogs and tweets — argue that copyright, and indeed other IP rights,
are overly restrictive. They are, of course, entitled to their opinions.
However, as a practising lawyer, I can attest from my personal experience that
some who argue the loudest for the free dissemination of the works of others
also complain loudly when their works are appropriated without compensation.
We also hear that copyright and, more broadly, other intellectual property
rights are stifling, that they constrain the free flow of information and
consequently are somehow bad for society and impede education and development.
Librarians sometimes assert this position. In contrast, universities are often
some of the more vigorous proponents of IP rights as a foundation for
commercializing university-sourced inventions.
One's views of IP are often skewed by the side of the telescope one is
looking through. I urge you in your deliberations to bear in mind that IP
rights, including copyright, are therefore well-recognized and time-tested
purposes. Generally, IP promotes economic prosperity and protects the health and
safety of Canadians.
I will not bore you with a dissertation on the role of patents, trademarks
and industrial designs and commerce. However, I will focus on the basic subject
matter of Bill C-11, namely, copyright.
Copyright acts as a reward for creative effort. The concept of creating
something and giving it away for free is "meritable." However, like it or not,
it is simply human nature that reward stimulates creativity. Copyright also does
not stifle the free flow of information, simply the right to replicate the work.
Copyright protects the form of the work, not substance of or ideas expressed in
Copyright is not an IP right that just protects big business. Individuals and
SMEs benefit. It benefits authors, musicians, artists, performers, software
designers and others of all stripes. It also benefits the general public, as
they are able to enjoy and use the copyrighted works that are created as a
direct result of the copyright stimulus.
The chamber has long noted that copyright reform is long overdue. Canada
adopted the WIPO Copyright Treaty and Performances and Phonograms Treaty back in
1996. Over four years ago, the Standing Committees on Industry and Public Safety
both recommended that Canada's IP laws be reformed quickly, not only to restrain
the flood of counterfeit goods in Canada but also to bring Canada's copyright
law into conformance with today's technology and international standards. I
appeared before both house committees and was pleasantly surprised at the broad
support for reform demonstrated by all parties. The Canadian Chamber of Commerce
is now very pleased to see that Bill C-11 has made it to the Senate, and we look
forward to speedy passage of the legislation.
The Canadian Chamber of Commerce subscribes to the following principles that
were initially set out in the introductory sections of Bill C-11. Specifically,
the Copyright Act supports creativity and innovation that is important to the
Second, the exclusive rights conferred under the Copyright Act provide rights
holders with recognition and remuneration that are essential to support such
creativity and innovation. Those rights must be balanced with the ability to
ensure that consumers have access to and ease of use for those works.
Third, the benefits of copyright protection are enhanced when countries adopt
coordinated approaches based on internationally recognized norms.
Fourth, copyright protections afforded under the act should be enhanced,
including through the recognition of technological protection measures, in a
manner which promotes culture, innovation, competition and investment.
The chamber agrees with the made-in-Canada solution, but that solution must
make sense, and we urge you to look to the experiences of other countries that
have reformed their copyright laws. In a knowledge-based economy and in a
digital economy, Canada must be on side with its trading partners' practices and
get it right.
The chamber believes that with Bill C-11, the government will take a
significant step in harmonizing our laws with our trading partners and provide
an excellent foundation for allowing Canada to become a member of some important
trading blocks. We strongly support the goal of bringing our legislation in line
with other leading nations that have adopted the WIPO Copyright Treaty and the
WIPO Performances and Phonograms Treaty. We feel that the copyright bill now
before the Senate will help foster new business models and stronger economic
growth and provide greater clarity.
Lastly, a word an balance, the most overworked word in the copyright debate,
as is the word "chill." Balance is important. I tell you what it is not. The
balance is not to gut the benefit of copyright under the guise of information
dissemination or because of vague fears of big business or foreign governments.
The balance is not concocting a right for someone to take away the rights of
another. It is simply, as it has always been, that the balance is a means of
ensuring proper reward for creative effort. We feel that a modern and effective
copyright regime is a critical pillar in Canada's digital economy in order to
ensure that the balance is maintained and that Bill C-11 provides that balance.
Again, I would like to thank you for the opportunity to appear today.
The Chair: Thank you very much, Mr. Webster.
Mr. Henderson, in your opening comments you said — I believe I am quoting you
directly — "careers destroyed, sometimes irreparably." Could you expand for the
committee somewhat just the issues of piracy, what it is and the implications in
Mr. Henderson: Absolutely. When I left private practice to join
Universal Music, the music business in Canada at the cash register, so from a
retail perspective, was worth $1.4 billion. Today, it is under $400 million.
There is $1 billion missing. There can be a debate about what proportion of that
might be directly attributable to privacy, but there can be no debate that most
of it is. If $1 billion is missing from your marketplace, that will have an
incalculable effect. It will have a ripple effect that goes right through the
entire economy. It will not be limited to the big businesses. I think Mr.
Webster makes a terrific point. Often it is suggested that the only people who
benefit from copyright would be Disney, Warner Brothers or Universal Music. In
fact, copyright acts to protect the small guy, the people who, in some sense,
almost cannot protect themselves because they do not have access to batteries of
lawyers and so forth.
What have we seen in the music industry? We have seen musicians who used to
be signed to major labels lose their contracts with major labels. A company like
EMI records would have at one point had 30 to 40 artists on the label and might
be having four or five now. Where did they go? Some of them did sign to
independents, big independents, but where did the artists who were on the big
independents go? Did they go to small independents? It pushed people further and
further out to the periphery. I would almost describe the result as turning
music from a career into more of a hobby. People cannot make money in music
these days. There is an absolutely astonishing contrast between an artist who
started their career in the early 1990s or late 1980s, like my wife Margot
Timmins in Cowboy Junkies, and an artist who has started since 1999 in the
Internet era. The disparity in earning ability is extraordinary.
The Chair: I will go my list of questioners, starting with the deputy
chair of the committee, Senator Hervieux-Payette.
Senator Hervieux-Payette: Thank you for appearing before the committee
this morning. You said that composers could not live off their art and make a
respectable living. Could you give us more information about the cause of that
drop in income?
Next year, your sales will reach $500 million, and the following year, that
number will exceed $800 million. Does this piece of legislation set out any
mechanisms that establish some sort of equity for creators? I am mostly
referring to the music industry.
Mr. Henderson: This legislation does not contain a silver bullet, and
we have never thought that it would. There is nothing in it that will allow us
overnight to restore the marketplace, but it does begin from an important
premise. It asserts a moral high ground. In effect, it makes the statement that
people cannot take other people's property without recompense. You cannot steal
music from an artist unless they want you to. Indeed, many artists do like to
give their music away on the Internet. There is nothing in this bill that would
prevent them from doing that. It starts from establishing a moral high ground,
and that enables us to work with the country and the citizens to rebuild the
marketplace. It also brings us into line with what they have done throughout
Europe and the United States.
Senator Hervieux-Payette: Would you say that, in the United States and
Europe, music creators are better protected?
Mr. Henderson: Without question, their laws are much stronger. I would
point to France, which has the strongest legislation in many respects. Perhaps
it should not surprise us that, as the home of the "droit d'auteur," they have
acted with such dispatch to protect them. There, recent studies have shown a
marketed decline in the taking of music and an increase in paying for music.
Senator Hervieux-Payette: Mr. Webster, last week, a great deal was
said about inheritance tax. For instance, in Quebec, we have a well-known artist
by the name of Félix Leclerc. Félix Leclerc has heirs. Riopelle, a great painter
who is known worldwide, also has heirs.
Do you feel that this bill has a defect because it does not allow a creator's
heirs to benefit from his work? In Riopelle's case, a painting that may have
been sold for $5,000 at the time could be worth $1 million today, and the family
Mr. Webster: Are you referring to a right of reversion? Mr. Riopelle,
for example, has assigned his copyright to someone. Your concern is that his
heirs will not benefit from that in the long run?
It is interesting that you ask that question, because I acted on behalf of a
company called Sylvan Entertainment for a number of years in litigation against
the heirs to Lucy Maud Montgomery, and I am completely immersed in Victorian
copyright law on reversionary rights. The reversionary rights were put into the
1923 Copyright Act as a result of their inclusion in the 1911 Copyright Act in
the United Kingdom, and they were included there because of concerns about the
heirs of Charles Dickens, who were impoverished.
My personal view, not speaking on behalf of the chamber on this, is that I
think that the reversionary rights provisions of the act are mistaken. You will
find that, around the world, most Commonwealth countries had enacted
reversionary rights provisions following the U.K. act in 1911, and they have all
been revoked. I think a copyright holder should clearly have the right do as it
sees fit with his or her copyright of works during the person's lifetime, so if
the decision is to assign the copyright to a third party, so be it.
I know that in the case of Lucy Maud Montgomery, she assigned her rights to a
Boston publishing company back in late 1910s, and she received about $17,000 or
$18,000 for her books, which was a fair amount of money at the time. Having said
that, those works have earned a lot of income over the years. I do not
particularly think that there should be benefit that reverts to the heirs who
frankly had nothing to do with the creation of the work when the author of the
work has made a commercial business decision to dispose of the rights.
Senator Hervieux-Payette: So you do not believe in the principle of
inheritance tax when the artist did not sell, but the work was sold and gained
value through several auction sales. Riopelle was generally very poor and left
only his work as inheritance.
In such a case, the heirs do not benefit at all from the talent of their
father or grandfather.
Mr. Webster: Let me clarify here that I am not speaking on behalf of
the Canadian Chamber of Commerce because the chamber does not have a view on
reversionary rights. I can tell you that during the course of my work on the
Lucy Maud Montgomery matter, I did read the Senate proceedings here in Ottawa
back in the 1920s on this, and this debate was thoroughly canvassed 80 or 90
years ago. Frankly, at the time, reversionary rights were put into the act. My
personal view is that I do not believe in them.
The Chair: Mr. Henderson, would you have a comment on the subject?
Mr. Henderson: The only thing I would say is with respect to resale
rights per se. I know they are recognized in Europe, and I think that was a
progressive move by the French government, for example.
My comment would be that I think that that is beyond the scope of this bill.
While that may be an issue that is worthy of being addressed, we have a very
narrow ambit here. This is a bill that concerns itself with the WIPO
intellectual property treaties, which are focused on the Internet.
Senator Massicotte: Mr. Henderson, you mentioned that this proposed
act basically re-establishes the high ground relative to ownership rights. Last
Friday, we had some witnesses saying that maybe the act goes on to define the
legal rights more clearly, but it will not establish the high ground because
those who are technologically proficient will continue to get around the locks.
Therefore, it will not achieve very much. I presume that you do not share that
opinion. Could you respond to that, though?
Mr. Henderson: No, I do not. If Canada was the first country to
embrace the protection of TPMs or if Canada was going first in enacting
legislation to implement the WPPT, I would say that we would have to think very
long and hard. However, we are the last. When people came to testify before you,
before the House of Commons and in the many hearings and round tables, there was
much speculation and imagining of things that might or might not happen. In
fact, TPMs are protected throughout Europe, Asia, the United States, South
America and all around the world. Our legislation is virtually identical to
that. None of the terrible things that are supposed to happen with the passage
of legislation like this have happened anywhere else. I would start by saying
that we need to throw the window open, look out into the rest of the world and
see whether any of these things have happened. They have not.
In terms of whether it is a perfect answer or a magic bullet, no, it is not.
However, take music; we used to be in the business of selling things. You buy a
CD from me; you have that thing. That is a business of selling things. We are
increasingly moving into a world where we provide access to you and to others —
to consumers of music — they are not buying something; they are acquiring
access. The models that employ this business model are models like, as we have
referenced, Zeke in Quebec, for example. Rdio is another one; you can visit it
at www.rdio.com. You access music. It is streamed to you. You do not get
anything. It is not a download; it is a stream. If we cannot protect the
integrity of that signal, then people could grab that signal, hack it and keep
it for a fraction of the cost of buying the music.
Senator Massicotte: Mr. Webster, another comment made to us is the
question of access. We all know about ownership rights. We all have private
property, but, even with private property there are certain legislative rights
that give people a right of access in spite of the agreement or non-agreement of
the author. In this case, locks trump all. There are exceptions, but the locks
will trump it all. What do you make of the educators and people in the libraries
saying, "We do not want to duplicate, but we want legislative access in spite of
the locks." How do you respond to that?
Mr. Webster: The position of the Canadian Chamber of Commerce is that
it does support technological protection measures, TPMs. My basic view on TPMs
is that a person who distributes copyrighted works should have the right to lock
down what they are distributing. If someone does not like that, they do not need
to buy it. They do not need to take a licence out on it. It is a package that is
delivered with locks, and I think that the commercial market will take care of
With respect to educators, it depends on what the purpose is, but I find it
hard to fathom how an educator can be impeded by a technological protection
measure on a particular work. Do they need to break a lock to copy music? Do
they need to break a lock to access a BlackBerry device? What is the work that
will be locked down? Textbooks will still be distributed in printed form. If
they are distributed digitally and locked down by TPMs, I have no problem with
that fact because those are the terms and conditions of use.
Senator Massicotte: How about the other comment that we have gotten?
Let us say that the locks permit it. We had one significant witness on Friday
morning saying that if someone is trying to facilitate access, which is
permitted, but it is not the user directly and they offend the act, the
government should use the regulations to make clear that unintended,
unauthorized access is not be an offence under the act.
Mr. Webster: If it is authorized.
Senator Massicotte: The locks permit it, but it may not be directly by
the person seeking access. He was making reference to that being an offence
under the act, and that was not intended to be.
Mr. Webster: Can you give me an example?
Senator Massicotte: There are all kinds of examples, such as someone
helping a blind person to get access, given that it is not the direct user.
Mr. Webster: A third party breaking a lock for a blind person, for
example; is that going to be happening?
With the copyright debate you see a lot of arguments raised that in the real
world never or rarely happen. If there is a third party breaking a lock for a
blind person, can the blind person not find access to that media in some other
way without breaking the lock? Even if it is broken, will there be a claim
brought? I think that is a very small, remote hypothetical.
Mr. Henderson: I want to add that that has not happened anywhere else
in the world. Why do we think that those sorts of things will happen only in
Canada? That would be my response.
Senator Moore: Thank you, Mr. Henderson and Mr. Webster, for being
I have a question for each of you. Mr. Henderson, you made the solid point
that this is about jobs and careers, and it is tough to make a living in music
these days. The act asserts a moral high ground that one cannot steal an
artist's music. I want to ask you about ephemeral rights, which I understand
currently put about $20 million or $21 million in the hands of creators. They
have been removed. Were you part of the discourse with the department when this
was bill was being put together? Were you part of the consultation?
Mr. Henderson: No. I can say that no one came to us and suggested that
it might be a good idea to take that right away.
Senator Moore: I did not mean that. I meant were you part of the
discussion not of this but of the whole act?
Mr. Henderson: Yes.
Senator Moore: Having established that, was this issue raised in your
discussions, or did you raise it?
Mr. Henderson: Yes. Since the bill was introduced, there has been an
issue that has been hotly debated about the so-called broadcast mechanical or
ephemeral right and the extent to which my members and creators deserve to be
recompensed when these types of copies are made by broadcasters.
Now, I do not view the language as having removed the right. I think that the
language qualifies the right, and I think that there will be a significant issue
between broadcasters and rights holders, after the legislation is proclaimed, as
to the exact effect it will have. Will it remain at $21 million? Will it be $10
million? What is the number going to be? The rights were very clearly affected.
Senator Moore: Aside from the dollar amount, the rights were affected.
Mr. Henderson: Yes. In effect, the legislation creates a subset of
copies made by broadcasters that would be royalty free.
Senator Moore: Minister James Moore was before the committee and said
that this has been eliminated in the interests of a balance. I want to know from
you where the balance is. What about the people who created those works? Did
anyone suggest to the department that a sum of $20 million or $21 million has
been going on so let us take a piece of that budget and put it over there to
ensure that those people continue to receive that?
Mr. Henderson: No.
Senator Moore: What happens to the money?
Mr. Henderson: We first saw this when it appeared in the bill as
introduced that first day. Everyone gets the bill and combs through it and
suddenly sees the provision that affects the broadcast mechanical. That was a
surprise to us at the time. As to what will happen, it will take millions of
dollars off the table.
Senator Moore: I do not understand. It seems to me that the creators
will have to go to court to fight for compensation for their creations. Why are
we doing that? Did you raise that?
Mr. Henderson: I prefer that the bill say nothing about the broadcast
Senator Moore: What does your wife think about it? She is a pretty
Mr. Henderson: I do not think there is an artist in the country who
would think that it is a great idea that the broadcast mechanical will be
affected by this bill.
Senator Moore: Okay.
Mr. Henderson: We have to look at the bigger picture. We have been
given a bill that has some good things and some bad things.
Senator Moore: I understand. It is a tough piece of proposed
legislation to tackle, which I acknowledge and appreciate. It is a good first
step, but I am concerned that some of these proposals will take money out of the
hands of the creators. If radio stations were to have nothing but back-to-back
ads, who would listen?
Mr. Henderson: I do not disagree. We are looking at this
pragmatically. We are missing $1 billion, not $21 million. If this bill has
impaired in some way our ability to earn a little money over here, our view is
that it restores integrity to the marketplace so that I can get $1 billion back.
That is a trade I am willing to make.
Senator Moore: I do not like the reputation that Canada has earned
over the last number of years as a piracy haven; it is terrible. If we could do
something about that, I would be in favour.
Mr. Webster, I was interested in the discussion with Senator Massicotte about
the digital locks. We have heard people say in respect of the disabled that
there is an exception with an exemption for them to use this tool. Others have
said that using that tool is breaking the law. Is that what you understand?
Mr. Webster: I do not understand it that way. An exception is provided
for disabled individuals. Under that exception they should be able to break the
lock, provided it is for that intended purpose.
Senator Moore: What about the issue of fair dealing? Proposed section
Fair dealing for the purpose of research, private study, education, parody
or satire does not infringe copyright.
It seems to be pretty broad. I am concerned about the moral rights for a
creator with regard to parody and satire. Do you have any thoughts on that?
Mr. Webster: My concern is moral rights, in the sense that you are
concerned that the parody or satire might —
Senator Moore: — change the nature or context.
Mr. Henderson: The author's reputation is addressed by the moral
rights provisions of the act. If the parody or satire harms the reputation of
the author — and I guess I want to use that horrible word "balance" again —
there is a balance that the court would address between the two. The moral
rights would probably trump parody and fair dealing.
Senator Moore: This will be tested in the courts. I know that we have
to start somewhere, but I am concerned. We heard evidence from creators last
Mr. Webster: Fair dealing is always a point of discussion. It is
impossible, in my view, to put a sharp box around what is fair dealing and what
is not. You need flexibility. In terms of material like parody and satire, you
could argue under the existing legislation that they are already covered. Bill
C-11 clarifies that they are covered, which is fair. It should not be an
infringement for someone to parody a work or satirize something provided it is
truly a parody and satire and not a replication of the work.
If someone puts something on YouTube that says it is a ridiculous work and
then plays the whole thing afterward, it is clearly not a parody. Parody and
satire are a public good. You get into more difficult questions with fair
dealing like creating mashups or political commentary, et cetera. It is
something that has to be left to the judge to make a decision on. There are many
things in copyright that you have to judge by your gut sense rather than by the
letter of law. Frankly, with some of our sort of aborted attempts to amend the
copyright legislation over the past few years, we tended to drill down a little
too far in the minutiae. You have to step back and look at it from a more
principles point of view. When you drill down too far in the minutiae, silly
exceptions pop up — what-if this and what-if that. The chances of that happening
in the real word are quite slim. I support parody and fair dealing.
The Chair: Mr. Webster, our Senate committee and many other committees
make use of video conference, as we are doing today. I may be wrong, but this is
the first time that I recall seeing two locks on the screen.
Mr. Henderson may say that it is actually on his wall and is a piece of his
art. Could you explain the significance of the two locks to the committee? I may
be wrong, but I think this is the first time I have seen two locks. I have never
seen that before. The two locks must have something to do with the system that
we are looking at for the first time during this copyright study.
Mr. Webster: It is probably an issue of privacy rather than copyright
law. Someone has locked this so no one can tap into it. It is a bit silly given
that we are being broadcast over the Internet. I do not think this has anything
to do with Mr. Henderson's support for TPMs.
Mr. Webster: I may be wrong. Is it on the wall behind you, Mr.
Mr. Henderson: It could be my new symbol.
Senator Massicotte: My question is for clarification of my
understanding of the bill and the equitable rights in terms of the locks. You
seem to be saying that the person has the right to break the locks if the person
has the equitable right to do so. I understood it a bit differently.
Mr. Webster: If it is in the exception, then they have the right to
break the locks.
Senator Massicotte: Educators, as defined in the bill, have that
Mr. Webster: There is no equitable rule. You cannot argue that you are
breaking a lock on a CD to post it somewhere for whatever purpose because you
think it is fair to do so.
Senator Massicotte: What about librarians and documentarians?
Mr. Webster: No. It has to fall within the exceptions of the proposed
Senator Massicotte: Exactly and specifically.
Mr. Webster: Yes, and I do not have a problem with that. Breaking
digital locks for decent purposes has to be addressed at a legislative level.
Senator Massicotte: What are the exceptions? Are they appropriate?
Mr. Webster: To be honest with you, I have not given great thought as
to whether there should be exceptions other than those listed. The exceptions
listed are appropriate. They are in place as a result of the government
listening to interested groups over the past years. Everyone has something to
say about it, and that is how they find their way onto the list of exceptions.
The amendments to the Copyright Act back in the 1990s contained a whole bunch
of specific exceptions. Making overhead copies of things to put on an overhead
projector, et cetera, did not just pop out as a basic gut instinct of equitable
conduct. It came up as a result of specific complaints and a recognition of the
practical reality of what happens out there in the real world. It is the same
thing with the exceptions to the TPM measures.
Senator Massicotte: Senator Hervieux-Payette was asking a question
relative to the rights of successors. When a person has assigned his copyrights
to someone else, her question was — as I read the act — that the copyrights die
or expire 50 years after the death of that person. I think her question was
whether that is appropriate and fair. Should this successor not have a continued
right in spite of the passing away of the author?
Mr. Webster: Then you are talking about a fundamental shift in the
value in this balance. If you think that the copyrights should survive for a
longer term than 50 years, you are giving a significant right in favour of the
Copyright extensions exist. Look at Disney in the U.S.; they have extensions
of copyright there. The reason is recognition that those properties are quite
valuable and the government does not think they should be falling into the
public domain. If you are talking about a term extension in copyright, it does
change the value of the right.
When you look at copyright versus patents versus trademarks, and I said
earlier I would not get into that, judgment calls were made at one point in time
that the term of copyright — life of the author plus 50 years — was fair. If you
think it ought to be less than that, such as 20 years, or more like 125 years,
that is a debate you can have.
Something that has bothered me my entire career is industrial design rights.
You have to get a registration for an industrial design right. The total term of
protection is 10 years, but I think that the artistic work put into an
industrially reproduced object is extremely valuable; 10 years versus 50 years?
Give me a break. If I sat here and did a doodle for you on my pad, that would be
entitled to copyright for my life plus 50 years. It is a bit of a balance.
Senator Massicotte: We are being told that in many countries it is now
70 years, not 50 years. Is that the case?
Mr. Webster: That is right. The reason is that Donald Duck, Mickey
Mouse and works of creative efforts that were created in the 1920s and 1930s are
now at risk of falling into the public domain. Those works are still considered
to be very valuable as they are, frankly, and there are interests who feel that
Senator Massicotte: Why is the worth of that work relevant? Picasso is
worth a lot. Is it not the concept that you get it while you are living plus 50
years? Why is it relevant?
Mr. Reynolds: What you are looking at now is the real fundamental
question of copyright law. How long do you get these exclusive rights? How long
can you commercially exploit them for? What are they worth to the public? You
can argue that Mickey Mouse should be worthy of protection forever. However, for
something else like my sketch and doodle, do you want to give me protection for
that forever? Probably not, but those are very fundamental decisions about value
and copyright that go directly to this word "balance" that I mentioned.
Mr. Henderson: We have to take this bill as it has been given to us,
to a certain extent. Term extension was not on the table, nor were resale
rights. They may be issues that should be raised or should not be raised, but my
view is they are not within the ambit of what we are discussing today, as
important as they may be. That would be my comment.
Senator Hervieux-Payette: Mr. Henderson, when you say that your
organization went from $1 billion to $400 million, are you talking about an
organization or a sector?
Mr. Henderson: That was the entire sector. That was the value of the
music industry in Canada in 1999 versus today.
Senator Hervieux-Payette: Are you representing the whole industry in
Mr. Henderson: No. My members — the major labels — would be
responsible for a percentage of that; maybe 80 per cent or something like that.
Senator Hervieux-Payette: Are we talking about Canadian companies?
Mr. Henderson: No. My members are foreign multinationals.
The Chair: On behalf of all committee members, I would like to express
our appreciation for appearing before us today. You have been very helpful and
We are now pleased to welcome, representing the Information Technology
Association of Canada, Karna Gupta, President and Chief Executive Officer, and
Ken Englehart, Chair of the Smart Regulation Committee; and, representing the
Ontario Arts Council, John Degen, Literature Officer; and, representing the
Council of Ministers of Education, Canada, Wanda Noel, Legal Counsel to the
Mr. Gupta, the floor is yours.
Karna Gupta, President and Chief Executive Officer, Information Technology
Association of Canada: Thank you, Mr. Chair and members of the Senate
committee. I am Karna Gupta, President and CEO of Information Technology
Association of Canada. With me here today is Ken Englehart, Senior
Vice-President of Regulatory for Rogers Communications. He is also the Chair of
ITAC's Smart Regulation Committee.
We are here to support Bill C-11, An Act to amend the Copyright Act, and to
present a technical amendment that we believe is necessary.
ITAC speaks on behalf of the Canadian information and communication
technologies, the ICT industry. We represent a wide range of small and large
companies, which account for about 750,000 jobs in Canada, approximately $140
billion in revenue to the Canadian economy. Our Canadian network providers
invest approximately $6 billion a year to support this infrastructure network,
including development and support of digital and broadband network and high
speed access throughout our country for wireless and Internet applications. This
is absolutely critical for our digital economy.
This morning I would like to focus on issues that have been raised by our
members. They are, first, use of cloud computing and network personal video
recorders, and second, the issue of notice-and-notice, and its implementation
time. The intent of the bill has always been not to impact personal video
recorder services where customers can view their stored content at a later
point. The concern today is that the provision in Bill C-11 in its current
wording may have some unintended consequences which can be negative for the
service providers and in general for the cloud computing industry.
The whole business model of an efficient service delivery and use is based on
three things: the ability to record and ability to store, in this case, either
on a network or cloud services, and finally the ability to retrieve and view
what has been stored. It is our understanding that the language in the current
bill may become contentious for service providers and hence end users to view
the stored content at a later date.
On the other issue, though we are supportive of the notice-and-notice
provisions in this bill, a few implementation issues need to be addressed.
First, we are concerned about the form of notices. They are disparate in their
form factor, both in terms of size and in content. Second, we are concerned
about the time our members will have to spend to develop the technical processes
with their obligations. We would not want this imposed without appropriate time
Finally, there needs to be recognition of the economics of this compliance
and the ability to recover cost, or at least have a business model that supports
this investment. We believe that some of these issues can be addressed through
regulations. However, as for timing, our view would be that the notice
obligations only come into force one year after the minister has enacted the
I will now ask Mr. Englehart to provide his comments as the chair of the
ITAC's Smart Regulations Committee.
Ken Englehart, Chair, Smart Regulation Committee, Information Technology
Association of Canada: Thank you very much, Mr. Chair and members of the
committee. My name is Ken Englehart and I am the Senior Vice-President of
Regulatory for Rogers. Rogers is a long-standing member of ITAC and I chair its
Smart Regulation Committee. I appreciate the opportunity to appear before the
committee today and will focus my remarks on those provisions that deal with
cloud computing and network personal video recorders or network PVRs.
We support Bill C-11 and endorse its intention to legalize the time-shifting
of TV programs and allow for the use of cloud computing and remote storage
services like network PVRs. This was emphasized by Minister Paradis when he
addressed Parliament at second reading of the bill.
For example, Canadians could copy works legally obtained on their computers
and mobile devices to enjoy them whenever they may. They could store content in
and retrieve it from the information cloud or use a network's PVR service. When
the minister appeared before you last week, he reaffirmed the government's
support for Canadian investment in and the adoption of cloud computing services
like network PVRs.
However, while we applaud the government's policy, we remain concerned that
the provisions of Bill C-11 that are intended to facilitate cloud computing,
network PVRs and remote storage are not as clear as the minister's statements.
It would be a shame for Canada to adopt a copyright modernization framework
intended to drive investment in innovative cloud technologies, only to see
Canadians denied those exciting services because of a few insufficiently clear
As was laid out for you in the Business Coalition for Balanced Copyright's
appearance last Friday, the bill requires a modest technical amendment, which
would provide greater clarity and certainty in the provision regarding the
hosting exception that provides for remote storage. This amendment is needed
because while the provision explicitly exempts the act of providing digital
memory to store copyrighted works, it only implicitly exempts the transmission
of that content back to the consumer. This creates legal uncertainty that could
chill any investment in network PVR and cloud computing services in this
country, tying up the issue in court for years.
What is a network PVR and why is it so important for us to be able to invest
in and roll out this service to Canadian consumers? Today Canadians use personal
video recorders, or PVRs, in their homes. A PVR is a set-top box that cable
customers rent or own and that is used by them to record programming from their
television set to watch at a later time of their choosing.
A network PVR is a service that will operate in much the same way as a PVR.
However, instead of storing recorded TV shows in a physical box on top of the
TV, a network PVR will remotely store our customers' recorded content in servers
located in our data centre.
Consumers in the U.S. are already able to enjoy the benefits of a network PVR
service. The U.S. cable company Cablevision launched such a service in 2010,
following the ruling of a U.S. appeals court that the concept was lawful under
U.S. copyright law. Armed with this legal certainty, other companies in the U.S.
are now rolling out network PVR services. In fact, a Harvard Business School
study recently found that the legal certainty provided by the
Cablevision case has pumped anywhere from $728 million to $1.3 billion of
venture capital investment into cloud storage services.
The overall benefit of a network PVR over a traditional PVR set-top box are
as follows: first, network PVRs provide cost savings for consumers because they
no longer have to rent or buy a physical PVR box. At Rogers, we estimate that
the monthly cost savings for our existing PVR customers will be in the range of
$5 to $7 a month.
Second, PVRs have limited storage capacity. A network PVR, on the other hand,
has unlimited storage capabilities, providing customers with many more
opportunities to record shows for later use.
Third, most PVRs available today can only play back the content to a
television display. With a network PVR, the content can be played back on other
screens securely, including tablets, PCs and smart phones. This allows customers
to view their content anywhere in the home.
Fourth, network PVRs are more secure than PVR set-top boxes. If a PVR fails,
everything is lost and we are unable to recover a customer's recordings. With a
network PVR, everything is stored in the cloud and backups of the recordings are
made continuously. As a result, network PVRs offer 99.99 per cent reliability.
Finally, a network PVR provides better energy efficiency for the consumer.
Set-top PVRs use significant power consumption because they are always on. With
network PVRs, there is no need for physical hard drives found in set-top boxes.
With all these customer-friendly advantages, you can appreciate why we want
to offer a network PVR service to Canadians. However, if legislative drafting
does not clearly reflect policy and legislative intent, it could result in these
services never being offered in Canada.
Fortunately, it is not too late to do something to solve this problem. The
Senate has a proud history of ironing out just this sort of legislative drafting
error to ensure Canada's laws achieve their policy objectives. This is a
situation that calls for just that kind of solution.
We have proposed a very modest amendment to proposed subsection 31.1(4) of
the bill to ensure that the government policy is clearly reflected in the new
law. That will drive investment and innovation for the benefit of Canadian
I look forward to your questions.
The Chair: I will now turn to the floor to Mr. John Degen,
representing the Ontario Arts Council.
John Degen, Literature Officer, Ontario Arts Council: I want to thank
the chair and members of the committee for inviting me to present today. I am
honoured to share my perspective with the Senate.
I am a professional writer. I have worked for well over two decades as a
publisher, editor, freelance writer, technical writer, head of a national arts
service organization for writers, and chair of various boards of directors in
this sector. My current day job is as the Literature Officer for the Ontario
Arts Council, but I am presenting here today first and foremost as an individual
writer of Canadian literature.
I have published two books of poetry, countless newspaper and magazine
articles, and one novel. I have been shortlisted and received numerous awards
for my writing. I am very close to completing my second novel and another
collection of poems, and I would really like there to be a workable copyright
structure in place for those works when they arrive in the world.
Far too much of what we hear about copyright these days references the
so-called users, but there are no greater users of copyright-protected material
than writers and publishers, and our user rights are tied very closely to our
rights as creators.
Copyright has never once gotten in my way or impeded my work as a user.
During university, I used the fair-dealing exception for my own research and
private study, and I continue to actively quote and reference the
copyright-protected works of others in my own work with absolutely no concern or
confusion about where the legal lines are or how far across them I may venture.
We are all creators and everyone has creator rights under copyright. We must
not mistakenly rob our creative selves so make things a little bit cheaper for
our consumer selves. If we change the balance of copyright, we rob everyone in
order to reward a privileged minority of consumers.
As I am sure you are aware, the process of copyright reform in Canada over
the past decade has been painfully slow and often interrupted, mostly because of
the incessant delay and confusion tactics of those who object to the very idea
of copyright protection. I congratulate the government for weathering the
free-culture storm and actually getting legislation this far. That is in itself
is a significant accomplishment.
That said, I worry about the excessive focus on exceptions that characterize
this bill. Too many exceptions to the law and it becomes more exception than
law. I think of copyright law as a fence — a pretty, nicely constructed,
non-threatening fence. A fence is a structure designed to define property. A
fence is not a series of holes through which folks can figure out ways to
trespass on property.
By concentrating too much on the holes and how one might use them to
trespass, Bill C-11 risks making the pretty fence of copyright completely
I would like to concentrate on one gaping hole in this fence: the new
fair-dealing category of education. This is an entirely unnecessary change. As I
have said, existing fair-dealing categories of research and private study have
served Canadian students perfectly well for many decades. There is simply no
problem that needs fixing with a new educational exception.
Where copying and education go beyond the categories of research and private
study — and years of photocopied works in course packs tell us that educational
copying very often exceeds those existing categories — we have an affordable
collective licensing system in place to ensure that "creatives" are paid
royalties for educational copying.
You have no doubt been told that the new educational fair-dealing category
will not damage that collective licensing structure. I have the feeling you will
be told that again today, but it already has damaged it. A number of
post-secondary institutions have already withdrawn from collective licensing and
have specifically cited Bill C-11's new exceptions as the reasons for doing so.
This licensing structure represents tens of millions of dollars per year for
Canadian writers and publishers. It is payment for actual copying beyond current
fair dealing. If the education category stays in Bill C-11, we already know the
result of that new dealing, and it is decidedly not fair.
The educational exception is extremely short-sighted. The very same students
who, we are told, do not need to pay for educational copying over the four years
of their degree program will eventually need to be paid for their own creative
work for the rest of their lives. As I have said, we are robbing our creative
selves to temporarily please our consuming selves.
If I could request one thing from this chamber in passing this bill, it would
be this: Please remove the short-sighted and completely unnecessary educational
exception. Our copyright fence has enough holes in it already.
Thank you for your time and attention.
The Chair: Thank you very much, Mr. Degen.
I will now turn to Wanda Noel, represent being the Council of Ministers of
Wanda Noel, Legal Counsel to the Copyright Consortium, Council of
Ministers of Education, Canada: Good morning, honourable senators. I am very
pleased to be here this morning representing Minister Ramona Jennex, Nova
Scotia's Minister of Education and Chair of the Copyright Consortium formed by
the Council of Ministers of Education, Canada. As chair, Minister Jennex
represents ministers of education from every province and territory in Canada
I am a lawyer in private practice; I have been practising copyright law for
30 years. The Council of Ministers of Education has been one of my clients for
about 12 years now.
What is the Council of Ministers of Education, Canada? It is an
intergovernmental body, formed in 1967 by education ministers. The council's
purpose is to support education ministers in meeting their constitutional
responsibilities to provide education in Canada's provinces and territories.
Copyright law directly affects education policy and education practice in
every classroom in this country. Ministers of education have been active and
engaged in the federal copyright reform process for 14 years, since 1998. We
find ourselves today in this chamber at the very final hour of the passage of a
The journey was caused by the fact that the existing copyright law, which
will be changed by Bill C-11, is unclear in many respects as it applies to
education. This lack of clarity is why the CMEC Copyright Consortium has been
persistent for 14 years in urging the federal government to clarify how the
copyright law applies to the use of digital technology for educational purposes.
The ministers of education seek fair and reasonable access to
copyright-protected material for students and teachers in their educational
pursuits. It should come as no surprise to the honourable senators in this room
that the CMEC Copyright Consortium responded positively to the passage of Bill
C-11 by the House of Commons.
Minister Jennex, speaking on behalf of her education minister colleagues in a
press release last week, applauded the passage of Bill C-11:
For years now, Canada's antiquated copyright laws have been of concern to
the education community, particularly their negative impact on the use of
the Internet and the ability of learners and teachers to harness the full
potential of digital technologies. Updating our country's copyright laws to
address Canadians' evolving digital learning needs is long overdue.
Advances in technology-enhanced learning call for a modernized Copyright Act.
Digital technology has opened doors to wonderful new ways for teachers to teach
and for learners to learn. However, students and teachers require a copyright
law that addresses these new technologies in a clear way. Without the education
amendments in Bill C-11, Canadian teachers and students at all levels, from
kindergarten to post-doctoral studies, may be legally obliged to forego learning
opportunities and curtail Internet use in the classroom out of fear that they
might be breaking the law.
The good news is that Bill C-11 appropriately deals with the significant and
important copyright issues for the education community. This legislation
provides the right balance between the rights of users, creators and the
commercial industries that market the works of creators.
Bill C-11 addresses the priority concern of education ministers. It
establishes the legal framework for students and teachers to use the Internet
for teaching and learning. The proposed educational use of the Internet
amendment in Bill C-11 provides a reasonable, balanced approach for learning in
the digital age.
The consortium ministers applaud the inclusion of education in the
fair-dealing provision, a position which is contrary to the learned gentleman on
my left, Mr. Degen, and I am sure we can have some interesting discussions about
that. The ministers believe adding education to the list of enumerated
fair-dealing purposes in the Copyright Act will not mean that teachers can copy
whatever they want. Copying by teachers must still be fair. It is a fair-dealing
provision, and the fairness requirement still exists under the two-step test to
qualify for fair dealing that has been established by the Supreme Court of
For example, copying entire books would not meet the second test laid down by
the Supreme Court. The dealing must be fair. The amendments to the fair-dealing
provision will have a positive impact. This amendment will bring Canadians onto
a level playing field with teachers and students in classrooms in the United
States, and in many other countries around the world.
Ministers of education, as the guardians of the public education system in
this country, view copyright very seriously. Copyright is respected by
government ministries, and school boards across this country teach respect for
copyright in their schools.
Education ministers across the country have long maintained that a modern and
balanced copyright framework will protect the public interest and will also
produce many societal benefits. Clearly, the need for such a framework has never
been more important than right now when all levels of government are investing
in connecting learning Canadians and promoting skills development and
In closing, I would like to read the following message to the senators here
today from Minister Jennex and her ministerial colleagues:
The consortium is pleased to see the copyright laws will soon be
modernized, providing opportunities for learning Canadians to excel in our
digital world and helping to position the country's education sector as a
leader in the information age. We applaud the federal government for moving
The Chair: Thank you, Ms. Noel.
I will move to my list of questioners immediately. I call first on the deputy
chair of the committee, Senator Hervieux-Payette, followed by Senator Oliver.
Senator Hervieux-Payette: If I may, I am from Quebec, and the
province's Minister of Education completely disagrees with the council's
position. She shared her concerns with us, and I understand that you do not
However, I am very intrigued by your insistence on the balance that exists
between the rights of creators and those of students and professors, who will
someday probably publish material and be deprived of copyright when their work
is reproduced. We are not talking about a huge amount, but I think that Mr.
Degen does not completely agree with you. What kind of money will be saved by
your anglophone provincial ministers in Canada? What amount have they been
earmarking for that sector so far?
Ms. Noel: The answer to that question is that with the passage of Bill
C-11, the acquisition budgets by school boards and ministers of education for
the purchase of copyright materials — books, films, music — will not change.
They spend hundreds of millions of dollars purchasing educational resources now,
and whether Bill C-11 passes or does not, those budgets will not change.
There are no "savings" for ministers of education or ministries or school
Senator Hervieux-Payette: I find that somewhat strange because
creators have talked to us about a fund that was ultimately accepted. It is also
a matter of managing — I would say carefully — since we are not talking about
hundreds of millions of dollars, but just over $20 million. That money was meant
for authors for the reasonable application of copyright and actually allowed
photocopies or digital copies. Universities will no longer have to pay that $20
million, so could you tell me how they will compensate the authors whose work
they are copying?
Ms. Noel: I do not want to use a pejorative word, but there has been a
great deal of rhetoric and numbers thrown around about losses that will result
from Bill C-11. None of those numbers have any empirical basis. The claims are
very easy to make and are unfounded in my view and in the view of my clients,
the ministers of education.
For example, the reference to the fact that universities and colleges have
withdrawn from the Access Copyright system because of Bill C-11 is patently
false. It has nothing whatsoever to do with Bill C-11.
What has happened is that academic publishers are now directly licensing
universities and colleges and, to a more limited extent, kindergarten to grade
12 schools, so they are bypassing a collective. Half of the universities in this
country, when offered a licence from a copyright collective at a rate they
thought was too high, chose not to operate under the collective system and buy
licences directly from publishing houses. The amount of those payments is an
empirical number and can be supported and justified in terms of evidence, so
that last year $161 million was paid by about 60 universities in Canada for the
purchase of the rights to reproduce academic journals and other educational
I think you are seeing winners and losers.
The Chair: I think Mr. Degen would like to express something as well.
Mr. Degen: I think that, absolutely, the post-secondary schools that
have decided to withdraw from the Access Copyright collective licensing have
quoted the fact that Bill C-11 is about to pass and that there will be new
freedoms for the schools. They have all talked about the extreme cost savings
that will come about. It is simply not true to say that they are not counting on
new freedoms in Bill C-11 because it is in every single one of their press
release announcements. In fact, most of those press release announcements are
direct quotes from a Toronto Star column by Professor Michael Geist, who
is advising that schools wait until the passage of Bill C-11 to see just how
much of a cost savings they can realize by withdrawing from collective
I certainly congratulate every school that is investigating private licensing
because that means revenues will flow to creators, but while they are
investigating private licensing, they absolutely intend to withdraw from the
collective licensing and to use Bill C-11 as the reason for doing so. That has
Senator Hervieux-Payette: Mr. Gupta, for purposes of comparison with
our creative artists — especially in literature — could you tell us what the
average income of those who work in your sector is?
My second question is for Mr. Englehart. Do you know why there is a lack of
technological protection and why the two technologies have been allowed to
compete? Is there a technical, political or economic reason behind that decision
to not grant you the protection you requested in the amendment to section
Mr. Gupta: You asked about average salary. You must realize that the
information and technology sector is a very wide swath of employment; there are
developers all the way to senior executives, so the average salary would be very
hard to pick across the board.
In a typical study looking at the information technology sector, with respect
to the development dollars on a global scale, Canada falls between $55,000 and
$65,000 per year compared to India, where it would probably be $45,000 and in
China $40,000. It varies greatly.
It is very difficult for us to net out what the overall average salary across
the segment would be. For developers and architects, we can look on a global
scale based on benchmarks typically where Canadian salaries fall.
Mr. Englehart: I am not aware of anyone who has really opposed this
type of clarity, so we find it very frustrating that we do not seem to have an
opponent here and yet we still have a lack of clarity.
The Chair: Thank you.
Senator Oliver: My question is directed to Mr. Gupta and Mr. Englehart
about their proposed amendment. After I give a little background, I will ask the
question: Could this not be done by regulation?
The first witness this morning before this committee was Graham Henderson of
Music Canada. What he said, among other things, is that Bill C-11 before us is
the fourth iteration of copyright reform. It has been going on for years, and it
is the first one to have actually made it to the Senate. The result of this
bill, after all these iterations, is that we have a balanced piece of
The House of Commons has retired for the summer, so you may have to bring
back 300 people for an amendment that will cost hundreds of thousands of dollars
just in travel alone, plus other expenses.
I heard in your presentation that the minister, both in the House of Commons
and in the Senate, said he believes that people should be able to store and
retrieve information in the cloud, and he was explicit in that language. It
seems to me that your main concern is that it was only implicit that it can be
retrieved, so the difference is between being explicit and implicit.
You said to us in your presentation today on page 5 that "if legislative
drafting does not clearly reflect policy and legislative intent, it could result
in these services never being offered in Canada." You did not say that it
"would"; you said it "could," so it is a possibility.
Since you have two explicit statements by the minister about the intent of
the Government of Canada with respect to this section, could that intent of the
minister and of the government not be included in a regulation?
Mr. Gupta: On the two issues I raised, the second one, the
notice-and-notice regime, could definitely be dealt with through the regulation
side. I think that needs to be clarified, and that clarity should come through.
Senator Oliver: On cloud computing?
Mr. Gupta: On cloud computing, the way this industry is moving, we are
looking at things that have happened behind us. We do not even know how some of
the technical changes will unfold over time. The specific clarity that is put on
the table needs to be provided either through some ministerial, much more
specific comments or the language in the law being changed. I realize the issue
you raise in terms of bringing back the House of Commons for this change.
This morning, we are here to raise the issue that there have been serious
concerns raised by many of our members. Once this has been raised, it is
probably important for us to put it before this committee to be looked at. If
there is another way to address this — as you mentioned, by ministerial letters
or specific comments, and that clarity is provided — I will let Mr. Englehart
talk to that, but that might be one of the issues we need to find out about.
Mr. Englehart: I am a communications lawyer by profession, and I do
not believe this is one that can be fixed with regulations, whereas many of the
things that people have come to talk to you about today can be. I understand the
quandary you are in, but I also know that cable companies like ours, which would
otherwise be launching a broadly based NPVR service, will in the face of this
uncertainty have to proceed cautiously, probably with a small trial, and await
the outcome of the courts, which is a real shame.
Senator Oliver: If it went to the courts, surely they would look at
the two explicit statements of the minister, both in the House of Commons and
the Senate, wherein "we intend that they can both store and retrieve in the
Mr. Englehart: Nothing would make me happier than if the court agrees
with you, but some judges will say, "I am sorry, the statements in Hansard
cannot override the words before me." I am hopeful but worried.
Senator Massicotte: Ms. Noel, you made reference that what is being
proposed in the bill is similar to what is happening in other jurisdictions. Is
that same exception allowed in the United States?
Ms. Noel: That is called fair use in the United States, and it
provides for the same purposes. It does not use the word "education" in the fair
use provision; it uses the word "teaching," and it says "including multiple
copies for class use." That provision has been in the United States law since
1977, and the publishing and creative communities in the United States have
continued to publish and thrive.
Senator Massicotte: Largely the same rules, with the obligation to
destroy 30 days after the course?
Ms. Noel: The 30-day destruction requirement does not exist in the
U.S. law, but in the TEACH Act — to tell you the truth, I would have to get back
to you on that. There is an act dealing with online learning in the United
States. It is not part of the Copyright Act.
Whether there is a 30-day destruction requirement for copyrighted material
contained in lessons in the United States, I could not answer that right now,
but I could find out.
Senator Massicotte: With the objective of fair dealing, does the
choice of the author to possibly put special locks on it impede your rights to
get fair-dealing access here in Canada? Could the locks impede your right?
Ms. Noel: The position of the ministers all along has been — and I do
not want to wring that word "balance" to death. The problem with a digital lock
provision is that it does not protect a creative work; it protects a lock, a
piece of technology. That is a fundamental and profound departure from anything
that exists or has ever existed in our copyright law. The debates that have gone
on through three major rounds of reform since 1988 have dealt with what rights
should be given to users and what rights should be given to creators. This is
the very first time that a piece of technology, as opposed to a piece of
creativity, will have rights attached to it. It is a profound departure because
copyright is supposed to protect creative endeavour and a lock is not a creative
Senator Massicotte: It is an additional measure to protect the rights
of the author. It looks like that person could use locks to impede the access,
to the detriment of the fair-dealing provisions of the intent and the act in
Ms. Noel: Yes.
Senator Massicotte: Yet you are saying that you are happy with the act
as it is?
Ms. Noel: I am really glad you asked me that question because
copyright law reform, the process that you are engaged in, is a difficult one
because you always have a winner and a loser no matter what decision you make in
a copyright reform exercise. I think this bill was excellently done because it
balances. It gives important rights to creators to be able to use digital
technology to earn revenue from their works, but at the same time it gives very
important rights to public interest users — libraries, archives, museums and
educational institutions — to be able to use those works of the mind for
There are tradeoffs. If you had a piece of legislation in front of you where
everyone was happy with it, then it would not have struck that balance.
Senator Massicotte: That never has occurred.
Ms. Noel: No; that is right.
Mr. Degen: This morning Mr. Henderson referenced a couple of times
real world situations and a lot of the panic that goes into extreme situations
that might happen. This is a Kobo eReader — not a commercial for Kobo — and I
have a bunch of books on it. Let us say I was studying these books in a
university environment. I have Moby Dick, that great Canadian classic up
here. Let us say I was studying Moby Dick. On this piece of technology,
Moby Dick is locked. It is within the Kobo propriety locked system. It
cannot be transferred to a Kindle, for instance. They do that for definition
within the marketplace. There are fears out there that were I to be studying in
a classroom environment, the lock would impede my fair-dealing rights to
research and private study. I get around that completely legally, and without
breaking any locks, by using paper and a pen. I read what is on the electronic
device and I make my notes for research and private studying. I am, in effect,
copying what is in the text and I do that perfectly legally. That is more likely
what will be happening in classrooms. The extreme fears about digital locks
locking students away from information are completely unfounded.
Senator Tkachuk: Mr. Degen, so it is clearer to us, because it is a
bit confusing, I would like to trace the money. You said the universities and
the departments of education pay someone. Who do they pay presently? Who are
they paying now that you fear they will not be paying in the future?
Mr. Degen: I am focused on the collective licensing revenues that go
directly to Canada's copyright licensing agency, which is called Access
Copyright. Access Copyright is a collective of writers and publishers who came
together to pool their work into a repertoire and offer it under a collective
licence. Otherwise, schools would have to spend a lot of time and staff effort
to find individual authors to get permissions and to make payments.
As a pooled repertoire, they can have access to the entire repertoire and pay
a small fee per year. That is under dispute right now. Post-secondary education
institutions en masse have walked away from renegotiation of collective
licensing contracts. Some have come back — some of their associations have
recommended that they come back; others have not.
Senator Tkachuk: They have made deals with someone else, or there are
no deals at all?
Mr. Degen: They have made private licensing agreements with other
content providers but they are basically shutting out the repertoire of Access
Copyright in their classrooms. That repertoire represents most of what is
written and published in Canada.
Senator Tkachuk: The money goes to Access Copyright and then Access
Copyright distributes it to the membership?
Mr. Degen: They distribute it to Canadian writers and publishers, yes.
They also have reciprocal agreements with 29 other countries around the world so
that if our work is used, for instance, in France or in England, we also get
copyright royalties through that.
Senator Tkachuk: If the publisher makes an agreement, does the writer
not still get money?
Mr. Degen: How so; if the publisher makes a private agreement?
Senator Tkachuk: Yes.
Mr. Degen: Yes, absolutely. As I said earlier, I congratulate anyone
who is afforded to make those private agreements. The fact is that Canadian
publishers and Canadian writers have expressed their preference to work as a
collective. It is easier for them and it is easier for the schools. The schools
are not saying we want it to be even easier by going individually; they are
saying we simply do not want to pay the licence at all.
Senator Tkachuk: My point is if the university does not have deals
with the publishers, they will have to have deals with Access Copyright. They
are not going to not have a deal with someone. Is that not correct?
Mr. Degen: That is how it should work. Yet they have walked away.
Senator Tkachuk: What are you saying? Are you saying that universities
will print these books or make copies of these books?
Mr. Degen: Universities have been using what are called course pack
collections for decades now. Instead of buying 10 books, you photocopy 10
sections from those 10 books and put them together into a course pack
collection. That practice will continue and they will hope beyond hope to lean
on Bill C-11's educational exception to allow them to do that without licensing.
Senator Tkachuk: Does Access Copyright have people working for them?
Mr. Degen: Absolutely.
The Chair: Access Copyright will be here this afternoon as a witness.
Senator Tkachuk: I know, but I want to ask this witness. Do they have
people working for them?
Mr. Degen: Yes; they have a staff.
Senator Tkachuk: How many?
Mr. Degen: I cannot answer that question. It is a small staff.
Senator Tkachuk: So the money that goes from universities to Access
Copyright goes to publishers and artists. Is that done equally? How are the
Mr. Degen: They have different distribution models but the bedrock
principle behind Access Copyright is that the money flows to the original rights
holder, who normally is the author. If money does go to publishers, it is
because those publishers have separate agreements with their authors. Eventually
it will then flow to the author through those separate agreements.
To make one more point, the average salary for a Canadian writer is about
$24,000 a year. The Access Copyright collective licensing represents, on
average, less than 0.2 per cent of university budgets. We are not talking about
a huge burden on post-secondary education by any stretch of the imagination.
Senator Tkachuk: How many writers would that be?
Mr. Degen: You will have to ask Access Copyright when they come this
afternoon, but I am pretty sure they represent several thousand independent
Senator Tkachuk: Full time and part time?
Mr. Degen: Yes.
Senator Ringuette: My question is mostly for the ITAC representative.
In your presentation, Mr. Englehart, you talk mostly about cloud data storage
and computing, but you indicated mostly for TV programs. I look at the amendment
that you have proposed and I cannot help but think that there is more to it than
TV programs. There is coming down the tube, probably from your association,
cloud computing for books and cloud computing for music — Rogers is already
providing music channels.
You desperately need this amendment because of the future you are seeing for
your cloud computing. Since you know that is where you want to go, you also know
that the $5 to $7 a month for the PVR box will have to be replaced.
I am looking at the cost factor here for consumers. What is the cost factor
that we are looking at for consumers who want to store electronic books, music
and movies? What is in store for the consumer?
Mr. Englehart: That is an excellent question. Cloud computing, cloud
storage and network PVRs are powerful technologies because a little bit of
storage costs a lot more proportionately than a great big computer. I have a
storage device in this iPad and I have a storage device on my PVR in my living
room. All those little bits of storage are quite expensive on a per gigabyte
basis. However, if you take a great big computer, a great big storage facility,
then the cost per gigabyte is much lower. The network PVR will save customers $5
to $7 a month because our costs will go down by that much.
All of these technologies are harnessing the fact that transmission is quite
cheap and storage is quite expensive. Instead of storing everything locally, you
store it somewhere in a big server farm and then transmit what you need, when
you need it and where you need it.
These are very powerful technologies and you are absolutely right; ITAC is
interested not just from a network PVR perspective but for the broader cloud
computing and cloud storage perspective. In the same way that I expressed to
Senator Oliver the fact that we cannot jump in with both feet with the network
PVR, entrepreneurs will be reluctant to start Canadian-based cloud storage
businesses. They will locate them in another jurisdiction if they have these
concerns about copyright.
Senator Ringuette: Let us go to the amendment that you have tabled
here. For the purposes of this meeting and our viewers, I will read the proposed
Subject to subsection (5), a person who, for the purpose of allowing the
telecommunication of a work or other subject matter through the Internet or
another digital network, provides digital memory in which another person
stores the work or other subject matter does not, by virtue of that act and
the transmission of the work or other subject matter to the person who
stores it, infringe copyright in the work or other subject matter.
Technically and legally, how will this amendment, if adopted, change the
perspective of ITAC?
Mr. Englehart: It will mean that we will have the confidence we need
to launch these new cloud services and we will jump in with both feet, whereas
otherwise we have to go very slowly and cautiously and wait for lawsuits.
Senator Moore: With regard to the amendment, Mr. Englehart, did you
appear before the House of Commons committee when it was studying this bill?
Mr. Englehart: Not me personally, but people from Rogers appeared,
Senator Moore: Did the Information Technology Association of Canada
Mr. Gupta: I think we did. We did provide a submission as well.
Senator Moore: Did you submit this amendment?
Mr. Englehart: Yes, we did, and it was discussed at the committee but
it was not incorporated into the bill.
Senator Moore: You tried there already?
Mr. Englehart: Yes.
The Chair: Witnesses, that concludes our questions. On behalf of all
members of the committee I would like to express our appreciation for your
appearance here today. Thank you very much.
We continue our study of Bill C-11 with our third session this morning and
are pleased to welcome, representing UBM TechInsights, Harry Page, Chief
Executive Officer; representing the Association of Canadian Publishers, Bill
Harnum, Publisher and 2012-13 President; representing the Canadian Publishers'
Council, Allan Reynolds, Chief Executive Officer, Pearson Education Canada; and
representing the Canadian Research Knowledge Network, Deb deBruijn, Executive
Director. We will begin with Mr. Page.
Harry Page, Chief Executive Officer, UBM TechInsights: I thank you for
the opportunity to be here this morning to speak on this very important subject
of Bill C-11, An Act to amend the Copyright Act. More specifically what I would
like to address with the committee this morning is how some of the proposed
changes may impact the ability of Canadian innovators to protect their
intellectual property rights beyond copyright itself.
I am the Chief Executive Officer of UBM TechInsights, as the chair has
mentioned. We are a local firm headquartered here in Ottawa. Over the last 25
years our mission has been to protect the intellectual property rights of
creators and owners. We do this primarily through the use of reverse engineering
or forensic investigation techniques as a tool to both detect and improve
UBM TechInsights, and more broadly the Ottawa-based reverse engineering
technology cluster, has continued to flourish over the last two decades with
annual revenues now approaching $250 million. We play a critical role in
detecting and protecting intellectual property infringement of both Canadian
innovators and foreign companies.
As I am sure you are aware, intellectual property takes many different forms,
and there are a variety of legal regimes in place to ensure its protection.
While Parliament has recently modernized and improved Canada's Copyright Act,
there are also a number of other forms of intellectual property that are just as
important in promoting and protecting innovation by Canadians and Canadian
companies, including patents, trade secrets and integrated circuits, topologies,
to name but a few, but herein is the anomaly we see.
The protection of intellectual property relies on national laws wherein
technology itself is not bound by borders or national laws, per se. In many
instances, the rights of creators and innovators in Canada, as well as their
access to international markets, rely heavily on ensuring the rights of foreign
IP holders remain intact and sacrosanct. Similarly, foreign-based companies rely
on comprehensive intellectual property protection here in Canada, protection
that complements and does not interfere with the intellectual property regimes
of their native countries. It is in this context that creators and innovators
work hard to monitor and detect infringement of their intellectual property in
rapidly evolving and highly complex technology environments, thereby protecting
their significant investment to realize the return on the same and enable them
to continue to fund innovation.
Quite often, it is only through the use of highly advanced forensic
investigation techniques that one can discover and prove intellectual property
infringement. UBM TechInsights applauds the efforts of the Canadian government
to modernize and improve intellectual property protection. However, I stress to
the committee the importance of ensuring such efforts do not unintentionally or
inadvertently impede the ability to protect other important forms of
intellectual property. In this regard, we have flagged concerns that aspects of
the Copyright Act may have unintended consequence with respect to the work of
our local technology cluster in the protection of intellectual property rights.
Specifically, our concern is that anti-circumvention provisions could create
legal uncertainty that could discourage the use of forensic reverse engineering
to detect patent infringement and trade secret misappropriation. This is
complicated by provisions related to the means for controlling access to a
device that may contain copyright works, even if such copyright works are in
fact unrelated to the object of the forensic investigation.
UBM TechInsights is presently working with the government and officials to
ensure that the regulatory language bringing the provisions of the act into
force are clear and precise so they will not hinder the full and forceful
protection of Canadian intellectual property and the protection of intellectual
property creators and owners in international markets. I am encouraged so far
with discussions to date and have every faith that these matters will be
effectively addressed in the regulatory phase of the process.
In particular, we believe there are a number of regulatory amendments to the
present exceptions for circumvention that would mitigate these risks while
continuing to provide the necessary protection to copyright. Two of these
exceptions would be to permit circumvention for non-infringing purposes and to
broaden the current investigative exception to include all laws of Canada and
those of our trading partners, specifically with respect to trade secrets and
foreign intellectual property. This experience, however, has underscored both
the importance and complexity of Canada's intellectual property regime.
Canada is a global leader in the protection and validation of intellectual
property. Canada and Ottawa's growing reverse engineering technology cluster is
now recognized globally as the champion for intellectual property rights of
creators and owners. I am confident that the role of our local cluster will
continue to grow in importance in market scope. It is becoming increasingly
recognized that intellectual property is the engine of the new economy. We must
do everything possible to ensure the full and complete protection of
intellectual property, not only in its respective forms and manifestations but
also in respect to how each IP regime must be enabled to complement and not
interfere with one another in achieving this objective. We will continue to
improve and enhance our technical skills and expertise to ensure that Canada
remains at the forefront of global leadership in this rapidly evolving market
and highly important technology sector for the benefit of Canada.
Bill Harnum, Publisher and 2012-13 President, Association of Canadian
Publishers: I am pleased to appear here today on behalf of the Association
of Canadian Publishers. I have been in the Canadian publishing industry for 35
years. I am now Director of Publications for the Pontifical Institute of
Mediaeval Studies at the U of T, and I spent the bulk of my career at University
of Toronto Press.
I thank you for this opportunity to speak about an issue that is of great
importance to all Canadians publishers, to those represented by Mr. Reynolds'
organization, which include the largest producers of classroom and curriculum
materials in Canada, but also to independent Canadian-owned publishers who I
represent. Among our members are scholarly presses from across the country whose
books are primarily intended for educational purposes; children's publishers for
whom school libraries and classrooms are a crucial market; and almost all of the
publishers of Canadian novels, plays and poetry, core material in literature
studies at all levels of the education system.
For Canadian publishers of all sizes, the education sector is enormously
important. The introduction of education as a purpose under fair dealing in Bill
C-11 without any definition of "education" or any clarification of "fairness" in
this new context creates vast uncertainty for hundreds of businesses and
thousands of authors and for the entire education system across the country.
Publishers recognize and have always recognized the need for fair-dealing
exceptions. We do not seek compensation when excerpts of our works are used for
reviews, even when the reviews are bad. We do not seek compensation from
individuals who copy excerpts of our work to pursue their personal interests in
specific subjects. We want our books to be read by whoever is interested in
them, and we do not wish to put up unreasonable barriers for those who seek the
information or the literary experience we offer.
However, in order to ensure that we remain able to produce these works, we
must ensure that our work is compensated, as all other work supporting education
is compensated, whether it is the construction of library buildings, the
instruction provided by faculty, or the equipment that furnishes laboratories.
Like all these suppliers to the education enterprise, publishers provide an
essential component. We invest in these works; we are entitled to be compensated
for their use; and that compensation is what propels the publication of future
We appreciate that our government values the high-quality books we provide
and is seeking to make them more accessible. We also know that this government
recognizes the importance of sustaining the system that provides them and does
not intend to undermine it.
Our concern is that the absence of clarity around the definition of education
as a purpose under fair dealing will have a number of unintended consequences.
The most immediate of these will be uncertainty in the marketplace, as users
claim a very broad interpretation of education.
For example, a bank offering staff training in customer service might feel
free to use copyright materials without compensation because the purpose is
"education." Some members of government have said that the definition of "fair"
is well understood by all, but in many other countries, similar legislation is
made much clearer by reference to maintaining a market as a factor in
No such clarity exists in Bill C-11. Inevitably, rights holders and users
will put forward differing interpretations of education and fair dealing, and
litigation will surely follow. Litigation takes a long time. The CCH
decision took 11 years to work its way through the courts, leading to 11 years
of uncertainty. No one — not teachers, not ministries of education, not
university presidents, not authors, and certainly not publishers — desires that
We understand the wish for more accessibility and we support it. We must,
however, have clarity in establishing a framework for it, and that framework
must be strong enough to support the investment that publishers make in our
I turn now to Mr. Reynolds to give you some concrete information about that
Allan Reynolds, Chief Executive Officer, Pearson Education Canada,
Canadian Publishers' Council: As mentioned, my name is Allan Reynolds. It is
my privilege to be the CEO of Pearson Canada. I have just recently celebrated my
fortieth anniversary in publishing, and that gives me an opportunity to speak
about the past with some expertise, and I can talk a little bit about the
present, and I suspect this group will have something to say about what the
future of publishing in Canada looks like.
In Canada, Pearson is one of the largest suppliers of both English-and
French-language educational materials. We can trace our roots back to 1842, with
the beginning of Copp Clark Publishing. We have been here a long time and we
have invested a lot of money in Canada.
My goal for the next two minutes is to attempt to help you understand the
potential unintended consequences should Bill C-11 pass into law in its current
Let me be very clear. We need a copyright bill. We need a copyright bill that
reflects the realities of our rapidly evolving digital marketplace. However, I
do fear the potential negative consequences of the passing of legislation that
proposes the addition of education as a purpose for fair dealing. Our most
immediate concern follows along from my colleague's comments about the
unintended harm that the CCH Supreme Court decision did to publishing in
Canada, or shall I say the varied interpretations of the decision.
Participants in our industry are not opposed to fair dealing — far from it.
In fact, we all benefit from the use it permits.
That being said, the definition of "education" in this legislation has no
parameters, leaving the meaning open to a wide range of interpretation. If fair
dealing is expanded to include education, as proposed in Bill C-11, there will
be unintended, detrimental consequences to our industry.
It is human nature to meet or to exceed a limit, and in the case of Bill
C-11, no limit has been set, leaving the door wide open to a wide range of
interpretations and definitions. Rights holders are put in an awkward position.
Pearson, the Association of Canadian Publishers, and the Canadian Publishers'
Council are put in an awkward position. If we criticize the proposed amendment,
we are seen as being at odds with our customers and opposing something that
appears to be good for students and educators. We are seen as exaggerating the
possible outcomes. That is not my intention.
Pearson has a massive investment to support the transformation in our market
from print to digital and web-based content. The publishing industry in Canada
has been at the forefront of the creation of innovative digital products that
meet the needs of the 21st century learner. Why would we, as an industry,
continue to invest in a marketplace that has such an uncertain future? Will
companies invest in the production of Canadian educational resources that have
been devalued by ill-defined educational exemption?
During the question period, I would like to bring forward two or three
examples of products that might be in jeopardy going forward, and you can see
the impact it might have on students in Canada.
Educators are looking for clarity and for confirmation that dealings they
make are permissible and fair. We, too, are looking for clarity. If the members
of the committee are the least bit unsure about the potential results of this
amendment, then they should propose an amendment that will achieve clarity and
reduce risk all around.
The insertion of four words, "as prescribed in regulations," into the
legislation would ensure that all stakeholders — students, educators, the
government, and the publishing industry — have a basic negotiated framework to
provide clarity, to mediate disputes and to mitigate damages. Otherwise, I am
afraid we will see a combination of a disincentive for content creators to
invest and potentially costly litigation. That is in no one's best interest.
Thank you for your kind attention. I would be happy to answer any questions
at the appropriate time.
The Chair: Thank you very much, Mr. Reynolds.
We now turn to Ms. deBruijn.
Deb deBruijn, Executive Director, Canadian Research Knowledge Network:
Good morning. Thank you very much to the committee. It is my privilege to be
here today to speak with you about the Canadian Research Knowledge Network,
which is a consortium of Canadian universities, 75 of them at the moment, that
work together to make copyrighted works in digital form, digital content,
available to the full range of faculty, students and staff at universities that
My name is Deb DeBruijn. I am the Executive Director of CRKN. This is work
that the universities have been involved in with this organization for the last
I was asked to appear not so much to give my organization's views on Bill
C-11. Our organization does not take a specific position on the bill, but we do
support the advocacy efforts and the positions taken by the Canadian Association
of Research Libraries and the Association of Universities and Colleges of
The reason that the work of our organization is relevant to this discussion
is that we offer a complementary way of making copyrighted works available to
authorized users under licensing provisions that we enter into directly with the
publishers. At the moment, we have agreements with approximately 50 publishers,
both Canadian and international. The value of these contract agreements are
currently over $100 million per year. These are costs that the participant
universities are covering out of their budgets, primarily out of their library
budgets, and represent agreements that are seen to be both in the best interests
of the publishers and the content owners, as well as the consumers and the
students and faculty who use these works.
We see this as a very important, complementary way of providing fair access
and compensated access to copyrighted works, because it is not on a
transactional basis. It puts in place stable agreements over a multi-year period
and takes away some of that risk that some of my colleagues here have talked
about, and ensures that there is fair compensation to the content creators and
content rights holders.
In many ways, when we started doing this work, we were dealing primarily
directly with publishers and only for digital forms of the content. What we have
found is that some of these publishers used to deal with access copyright in the
print environment but in the digital environment have found it more beneficial
to enter into agreements directly with the library or consortium of universities
in order to scale these agreements and to put in place non-transactional types
We are now also finding, with the proposed changes in the Copyright Act, that
our licensing approach to the use of these materials is coming closer in line.
Publishers in our licences have long agreed on some of the provisions that are
now finding their way into the Copyright Act, so we have evidence to show that
in fact when there is this kind of stable regime, it is possible to come to
agreements where there is benefit both for the rights holders and for the
I would be happy to answer questions of the committee following these
The Chair: Thank you very much, Ms. deBruijn.
I will now turn to our list of questioners, starting with the deputy chair of
the committee, Senator Hervieux-Payette.
Senator Hervieux-Payette: Mr. Harnum, you talked about providing a
clearer, more concise, definition on educational material because the banks that
offer courses could use the "education" clause. Do you have any other examples
in other areas? We are talking about all educational material made available by
the private sector, and not by places of instruction because, to my knowledge,
that is not specified in the legislation in terms of education. It is a matter
of education departments, but also education in the general sense.
Would you agree with the clause if it was well-defined and guaranteed
Mr. Harnum: I believe that our biggest concern is the lack of clarity,
you are right, and we can certainly point to examples where a bank, one of
Canada's prime banks, notified access copyright two years ago that they would
not be renewing their licence because, once this bill was passed, they felt that
their use would be fair dealing right across the board. That is certainly a
concrete example of that sort of thing.
In the government's backgrounder to Bill C-11, they stated clearly that this
bill would define education as education within a structured context, such as
education within a university or a school, but that did not make it into the
bill. There were other things mentioned in the background papers that did not
make into the bill, including the importance of market damage. There is a lot of
need to clarify that entire issue.
Senator Hervieux-Payette: My second question is for Mr. Reynolds.
Actually, I think you agree with the fact that the education issue lacks
clarity. Do you make a distinction between electronic copies and paper copies?
Do you think one would be easier to cover than the other?
She is mostly talking about electronic copies. Nowadays, a house like yours
probably produces both, so it makes material available to the clients who buy it
in either electronic or paper format. If we were to keep the current system, do
you think that electronic and paper copies would be well-protected and that
creators would be compensated appropriately?
Mr. Reynolds: That is a good question. However, I would suspect that,
as time goes by, as the future unfolds, we will find that we are going to need a
system of compensating publishers, authors and creators both digitally and in
ink on paper. My suspicion is that our Copyright Act needs to be very clear on
how we will approach compensation going forward. Really, all we are looking for
at this point is clarification.
Senator Hervieux-Payette: You promised us some examples. For the sake
of those listening to us, I would like to hear some specific and concrete
examples that could illustrate your concerns or recommendations.
Mr. Reynolds: Mr. Chairman, with your permission, I will reach under
the desk. I have something here.
The Chair: By all means.
Mr. Reynolds: This book that I am holding is a social studies
Saskatchewan custom book. If you can imagine, I am holding the book in one hand
and the digital copy in my other hand. It certainly is available in both ways.
This was created specifically for the province of Saskatchewan, for the students
of the province of Saskatchewan. It looks at social studies from the perspective
of a Saskatchewan student from a first Nations perspective. If you could
imagine, we created this as a custom book with no guarantee of a sale. Once we
have created this book, obviously it is our job to go out and sell it to the
boards, to the schools and to the teachers to ensure that we are being
compensated for what we have done. There is significant cost in both the digital
and the hard copy.
Going forward, we know that if there are not regulations put in place, if
there are not definitions of what fair use truly is from an educational
perspective, individuals, teachers, will take this and simply create an
opportunity for a new book, if you will, taking a chapter here, a chapter there,
integrating it with their own content and taking chapters from other books. We
cannot see how that would compensate us for the monies that will be put at risk
as we create this product.
Our concern is that there is a way to identify what is a fair use of content,
how we will be compensated for it, and giving clarity to the teachers, boards
and provinces on what they can do and cannot do. Is that reasonably clear?
Senator Hervieux-Payette: You said two or three, so I am ready for
your other examples.
Mr. Reynolds: This book is actually a small part of a grade 4 French
second-language program. It is meant for students in grade 4 across Canada who
are learning French as a second language for the first time. That is their entry
point, if you will. It is not for immersion students who are learning everything
in French. It is not for core French in the province of Quebec or elsewhere in
Canada. There is no market in the world for this product except in Canada.
Without some degree of certainty that it will not be used in a way that breaks
up the program and that it is used pedagogically correctly, we are not
compensated for it. Once again, this puts it at risk.
My job as CEO of a company, and many of you have been in this position
before, is to assess risk. Where do we invest our money to be sure that we will
have a return on our investment? Pearson is a very large company, worldwide. My
superiors will make decisions about risk in Canada. I have to make decisions
about where that money will be invested across Canada as well. My suspicion is
that if an uncertainty is created, we will be at risk in terms of the creation
of products for students going forward in Canada.
Senator Moore: Mr. Page, on June 6, you appeared before the House of
Commons Standing Committee on Industry, Science and Technology in connection
with the review of this bill, and I read your company's press release. It says
you flagged concerns that certain aspects of the bill may have unintended
consequences with respect to the protection of other forms of intellectual
property, in particular patents and trade secrets. Specifically,
anti-circumvention provisions could create a legal uncertainty, discouraging the
use of reverse engineering to detect infringement by restricting access to a
device that may contain copyrighted works, even if such works are in fact
unrelated to the subject of the reverse engineering effort. Could you explain
Mr. Page: Sure. There is probably a bit of marketing going on there. A
perfect example would be that there is a growing gaming industry in Canada.
Someone could create a gaming console, where the person who is actually bringing
that gaming console to the marketplace is the owner and creator of the
copywritten material. However, the hardware that is put into the console itself,
the electronics, the other software, all the control mechanisms could be
misappropriated from someone else. By putting a TPM on that gaming console,
actually opening up that device to prove that there is misappropriated
technology other than what the copyright owner actually owns in there could be
deemed to be illegal.
Senator Moore: You have the game.
Mr. Page: The technology protection measure could actually inhibit you
from opening up the game. There could be a seal, for example, on the enclosure
or some kind of technology protection measure that prevents you from actually
opening up the enclosure and seeing what is actually inside that or the
electronics or looking at some of the other software that might be utilized.
Senator Moore: Who will open it up? I do not understand.
Mr. Page: That is what my company does. We do that on behalf of the
other intellectual property owners. We do the forensics. The best analogy for my
company is that we are like the crime lab on the American TV show, CSI.
We do the forensic investigation to provide evidence of use that allows the
rightful owners of intellectual property to identify misappropriation of that.
In the case of this gaming console, if a client of ours felt that there was
something within that game that actually infringed upon their intellectual
property, we would need to open that up, provide that incontrovertible evidence
that says, "Yes, indeed, your rights have been violated."
Senator Moore: Given what you do, are you saying that this bill would
make it illegal?
Mr. Page: We believe it could create legal uncertainty around that
aspect of our business. In other jurisdictions, the right do that is protected
in law. For example, at the micro circuit or the semiconductor level, there are
acts in the world. In the U.S., there is the Semiconductor Chip Protection Act.
It says that as long as you obtain the product legally and do the forensic work
for a legal and honourable purpose, those acts are allowed in law. You are doing
that to help someone protect their intellectual property rights. That is the
basis of our business. That is how we protect people and illustrate
Senator Moore: Very interesting.
Ms. deBruijn, you mentioned that the Canadian Research Knowledge Network has
arrangements with 75 universities and 50 publishers. How does it work? Can you
run through what your company does so that I can understand? We have heard
comments here today that, because of this act, people think that they will not
have to enter into rights agreements with companies such as yours or Access
Copyright. I would like to know how it works today, and if that is a concern for
Ms. deBruijn: Our organization is a not-for-profit organization, and
its members are 75 universities. That includes all of the major universities,
all of the doctoral and PhD granting universities and the majority of the
I would say that our organization does not envision a future when all of the
access to copyrighted materials will be provided either through large licences
like the kind that we enter into now or, alternatively, that it will be all
covered under compensation through Access Copyright or through fair-dealing
We believe that the future will probably be more of a portfolio of different
approaches depending on the need, the scale, the cost and so on, and that there
will be a variety of mechanisms that will work in a complementary way together
to provide both a fair regime for creators and consumers and a flexible one
where there will be a provision for supporting and enabling innovation and the
production of new works.
For example, we work specifically with some of the very large, international,
very expensive scholarly publishers where we want to be sure that there can be
provisions for unlimited use of the content. We typically put in place these
licences that cover a broad range of rights and accesses, such printing and
using in classes.
Senator Moore: Aimed at the research sector.
Ms. deBruijn: Yes, aimed at the research community. It means that it
extends the kinds of access and uses that would typically be of a scale and
magnitude that would not be allowed under exceptions to the Copyright Act and
would typically not be something dealt with on a transactional basis, where
every single use has to be counted. The administration of that is very onerous
Because these are very large agreements, they cover a very large group of
students, faculty and staff, and they are for a multi-year period. There is
stability. There is confidence on the part of both the publisher and the
universities that these are stable, that the costs will not go through the roof
and that the kind of use that they need — the bona fide educational use — is
Ultimately, where the publisher sees a return is not only in financial
compensation for the use of those works but also in that foundation of knowledge
being used and re-purposed and coming in the form of new publications, new
knowledge that is created and new scholarly work that is brought to the market.
Senator Moore: On the practical, day-to-day basis, the Canadian
Research Knowledge Network might have an agreement with University of Toronto,
for example. We probably could not afford this at Saint Mary's University.
You are aimed at research schools primarily?
Ms. deBruijn: The content is aimed at the research agenda but not just
at research schools.
Senator Moore: You enter into agreements with those universities.
Ms. deBruijn: They are members of our organization.
Senator Moore: You charge them a fee.
Ms. deBruijn: Yes.
Senator Moore: What do they do? Do they pass that on to the students?
Ms. deBruijn: No.
Senator Moore: What about the people who wrote the books that the
publishers represent? How do they get their money?
Ms. deBruijn: We broker the agreements between the publishers, and
then the contracts that are created have the universities that wish to
participate joining those agreements. For the most part, the costs of these are
covered by the libraries; it is part of their acquisitions cost.
Senator Moore: University libraries?
Ms. deBruijn: Yes. Those costs are not passed on to students. The
universities pay an operations or administration fee to CRKN, but the costs of
the licences are shared and cost-recovered. There is no overhead on that that is
charged to the universities. It is based on a cost-recovery system.
What arrangements the publishers have with the authors and the content
producers is a separate matter.
Senator Moore: You do not get into that?
Ms. deBruijn: No.
Senator Hervieux-Payette: You were talking about the value of these
agreements being $100 million. What is the component of the material itself, if
I were just buying a copy and not making a reproduction, and the reproduction
attached to it? What is the percentage? Is it 10 per cent of the book? When we
had an author appearing before us last week, she was saying that, when one of
her books is sold at $10, she gets 90 cents. Of course, if it is being
reproduced under the new law, she believes and we heard that she might not be
sure to get additional money if 100 copies were made of her book.
What are you doing in your organization? How much money is going back to the
author for electronic or paper copies? How much will the authors get?
Ms. deBruijn: I am not sure that I can answer that question because
those business arrangements are between the publisher and the authors. We are
not privy to that information.
Senator Hervieux-Payette: Do you pay something to the publisher? You
pay someone. I do not mind the percentage; I am just wondering if there is a
cost attached to the reproduction per se.
Ms. deBruijn: No, not per se, not on a transactional basis. For
example, we have one major scientific publisher where the annual cost for that
licence is $30 million. That $30 million is paid to the publisher irrespective
of how much usage there is of that resource among the participating
universities. Strictly hypothetically, if there were not a single use or access
of that scholarly material, the cost would be exactly the same. Equally, if the
usage is 1 million or 2 million downloads of different, specific articles, the
cost remains the same.
That puts in place what we believe are very fair compensations to the
publisher for that material. It is not free, cheap or misappropriated, but it
also gives the universities and the scholars certainty and stability to fully
utilize that material in all elements of their work.
The basis is that we believe it contributes to the production of new
knowledge, new information and new scholarly content that ultimately is brought
back to the publishers and the marketplace.
Senator Hervieux-Payette: Can you be more precise? I do not know how
that will work for reproduction versus production, which is costs plus profit.
Take my example of $10. Everyone is satisfied at $10 but when it comes to
reproducing, do you add something? What percentage do your organization and the
publishers put in the formula — and I suppose it is a formula — between the
original copy and all the copies that will be made from that specific piece?
Ms. deBruijn: There is no formula. The price remains stable at the
negotiated price for the term. If that price is deemed to be inappropriate at
the end of the term, then there are further negotiations at the renewal points.
There is no formula. There is no transactional cost for reproduction.
Senator Massicotte: I have a couple of quick questions for either Mr.
Reynolds or Mr. Harnum. You are seeking clarification to the proposed act. What
is the case in the United States? We were told that our legislation resembles
very much what is in the United States. What is their case? Is it more specific
than our proposed act?
Mr. Reynolds: The regulations in the U.S. specifically talk about the
replacement value, the market ability of the product and the loss of market. In
terms of the educational exemption, fair dealing is the opportunity for the
publisher to be compensated. If a sale is lost, then it is not fair use. If
under normal circumstances a product is purchased as opposed to copied, then it
is not fair use. That is the essence, if you will, of the difference.
Senator Massicotte: Did you wish to add, Mr. Harnum, or is it clear
Mr. Harnum: I think that is clear.
Senator Massicotte: The Supreme Court issued criteria to determine,
one of which is no prejudice to the author. Would that not be the same thing as
the Americans have? If you suffer, then it is not fair use.
Mr. Harnum: The six-step guideline, which is in the CCH Canadian
Ltd. decision, is just that. It is non-exhaustive. You do not have to cross
each "t" and dot each "i." Market damage specifically in the decision has been
cited as neither the most important nor determining importance in deciding
whether use is fair. That is the contrast between our situation and the American
situation. The three-step test is exhaustive. You must do all three things for
an exception to be considered fair under fair dealing and for an exception to be
There is a difference.
Senator Maltais: Mr. Reynolds, you are the Chief Executive Officer of
Pearson Education Canada, a company that has been around for many years.
Earlier, you gave us two examples of publications that could not survive with
the current legislation. Could you now give us two examples of great successes
for your company and for authors?
Mr. Reynolds: I could give you many more than two examples. Over the
past 40 years I have been in the business after starting out as a physics
editor. The books that I edited back in the early 1970s were an adaptation of an
American product adapted for Canadian use for the specific pedagogy curriculum
within the province of Ontario. It was a hugely successful program in the sense
that it sold for the better part of two decades. That is the type of product
that any commercial publisher or commercial entity would like — something that
essentially is an annuity as it continues to sell year after year. Certainly, I
was specifically involved with that one.
The company I lead now has been at the forefront of mathematics education in
Canada. We have published several very successful mathematics programs for K to
12 and K to 6, with extensions into middle and high school, which were written
specifically for the Canadian marketplace. The exception is our national program
and the opportunity to adapt for the curriculum of the provinces of Alberta and
Ontario and for the Maritimes. Those programs have been immensely successful for
Senator Maltais: When you publish a document intended for a very
specific clientele, such as the second example you gave us — an
introduction-to-French book used in the fourth year in Saskatchewan — are you
not taking a risk in the first place, since you know very well that you will not
be able to sell the book in Alberta, Manitoba, British Columbia, Newfoundland,
Ontario, New Brunswick? Would that not rather be an experience that would help
you sell other books for which you would be well-paid?
Mr. Reynolds: There is no easy answer to that because each program is
specific to the situation. The grade 4 book for all of Canada is essentially for
students studying French as a second language. The grade 7 book for Saskatchewan
was produced on a custom basis. We were the only company that was going to
produce this book for the province of Saskatchewan. However, there is no
guarantee that anyone will buy it. In many circumstances, we need to go out and
buy it, so there is an inherent risk. Of course, the risk is less when you are
the only publisher. In the case of the K to 6 elementary math program I
mentioned, we have three and sometimes four competitors.
Senator Maltais: You said earlier that, once a book has been edited,
you have to sell it to school boards and schools, but now you are saying that
you receive an order.
Mr. Reynolds: No, we were given the right to produce that product. At
that point, the school boards have to buy it. In this specific case, the
province dictates what the curriculum will look like. It is not necessarily a
board decision to purchase that product. They can implement the curriculum in a
variety of ways. Yes, there is an inherent risk in any program; it depends very
much on the circumstances.
Senator Maltais: In closing, I think that the volume you printed was
ordered by the government and imposed on school boards.
Mr. Reynolds: No, in most cases it is not.
Senator Maltais: So why did you create it if it had not been imposed
on school boards?
Mr. Reynolds: It is an experience.
Senator Maltais: So we are talking about an experiment? Great. You do
know that, when it comes to experiments, they can result in a success as well as
Mr. Reynolds: Absolutely.
The Chair: Witnesses, that concludes the questions we have for you
today. We thank you very much for appearing before us. It has been very helpful.