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

Issue 23 - June 26, 2012 - evening 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 7 p.m. to give consideration to the bill.

Senator Irving Gerstein (Chair) in the chair.

[English]

The Chair: Welcome back to our third session of the day. We welcome back officials. From Industry Canada, we have Paul Halucha, Director General, Marketplace Framework Policy Branch; Anne-Marie Monteith, Director, Copyright and Trade-mark Policy Directorate; Robert Dupelle, Acting Senior Policy Analyst, Copyright and Trade-mark Policy Directorate. From Canadian Heritage, we welcome Lara Taylor, Acting Director, Policy and Legislation, Copyright and International Trade Policy.

Our panel is here to answer questions of senators. We have a half hour set aside for this session. I would suggest that we limit each senator to five minutes each, and I would ask if you would be indulgent in not raising supplementary questions so that we can proceed through the list.

[Translation]

Senator Hervieux-Payette: Welcome to the committee. I hope some of you have heard our deliberations. One of the major concerns of the witnesses who have appeared and who do business with authors is the use of material produced by authors in the educational setting.

So our question is very clear and simple: why, as we speak, have organizations like Access Copyright and other players in the industry not renewed their agreement? Why are all these people concerned about the new act not requiring payment of usually reserved amounts of money for the use of a book or educational material, be it in a paper copy or an electronic one?

Anne-Marie Monteith, Director, Copyright and Trade-mark Policy Directorate, Industry Canada: Bill C-11 has a certain number of provisions and exceptions for the use of materials in schools, among others, with respect to online learning, the digital distribution of teaching material — which we call Digital Course Packs — that will now be possible as a result of this bill, digital interlibrary loans and strengthening existing exceptions in education.

With respect to the agreement between Access Copyright and the universities, that comes under their negotiations. It is up to the universities to decide if they think they need a licence with Access Copyright, if they need to use the material or if they have other sources of information that meet their needs.

Senator Hervieux-Payette: Regardless of the format used, will the authors receive compensation each time the 1,000, 2,000 or 5,000 students get a copy of a work? Some organizations have shared their concerns with us, but in the end, the people who are most concerned are the authors. None of the authors we met with told us that they felt reassured that they would be compensated if their work was used in an educational setting, be it at the primary, secondary, college or university level.

Will these people continue to receive financial compensation for each duplication, based on a formula that had to be negotiated in the past and that satisfied all of the players, each time a book is copied many times? How will our authors be compensated in the future?

Ms. Monteith: Authors will continue to be compensated for the use of their works. For example, a work cannot be reproduced or copied in its entirety. Under Bill C-11 and under the Copyright Act, that is not a permitted use and nothing will change that provision.

Fair dealing in education is much more limited and would not permit the reproduction of an entire work.

Senator Hervieux-Payette: I am talking about a chapter, a section of a book. University professors told us that they collate a number of works by different authors on the same topic; they keep certain sections in books and make a new book out of them. Be it electronic or not, as far as we are concerned, it should not change the compensation that the author should receive for the number of people who have access to the document.

You are telling us that they are protected for one volume. I am asking you if they are protected for a chapter, for a part of their work that is used by the universities.

Ms. Monteith: With respect to fair dealing in education, an excerpt may be used in an educational setting for educational purposes. For example, if a professor wants to give his students a test, he could use an excerpt from a poem or book. He does not need to obtain authorization from the copyright holder to do that. The use will be permitted in very specific situations for educational purposes.

Now, there are some limitations. Six factors come into play for everything having to do with fair dealing, which identify some constraints and therefore a framework within which this may operate to respect the rights of these authors.

[English]

Senator L. Smith: I have a general question for the panel. Could you tell us some of the positive elements from the bill that go to supporting the network PVRs and cloud computing? Could you please give us a background on cloud computing as well?

Paul Halucha, Director General Marketplace Framework Policy Branch, Industry Canada: I will respond to this one, and I am pleased to do so.

Bill C-11 provides a framework that allows for greater adoption of cloud computing services. Witnesses who appeared before this committee have identified three acts related to cloud computing that need to be covered by the legislation in order to permit cloud computing and in order to permit network PVRs.

First, an individual needs to be able to make a copy. The bill provides this clearly through the time shifting exception for consumers.

Second, the individual needs to be able to store the copy online. PVRs right now require physical storage in residences on a physical device. The difference between a network PVR and a PVR is that the storage takes place on a network. The individual needs to be able to store that copy online; therefore, the bill provides a safe harbour provision, which shelters service providers from liability when they host the materials stored by users. Service providers are sheltered when they act as neutral intermediaries. What we mean by "neutral intermediaries" is that, effectively, they store the information, just as a PVR stores it at home.

Third, the user needs to be able to retrieve the copy that is being stored. There is little use to situating or uploading content without being able to have it retransmitted back to the individual. The hosting safe harbour allows service providers to provide storage space for the purpose of allowing the telecommunication of the content.

In our view, it is very much communication between an individual and himself. The network provider, to the extent that he is only facilitating the storage of information and the transmission back and forth by the individual, is acting in a neutral fashion.

These elements of the bill set the stage. They are the elements of a modernized copyright framework. In our view, it is very much up to businesses in this context to design the products and services that leverage these new provisions that will become law if the act is passed. Whether a particular service would be able to benefit from this framework will depend on how that particular service works. We strongly believe that there is the framework within the bill to provide for both network PVRs and cloud computing.

The Chair: Thank you.

[Translation]

Senator Massicotte: Ms. Monteith, I would like to continue the discussion that you had with Senator Hervieux-Payette. You responded by setting out what the bill proposes. However, we have the impression and have been told that the proposed amendments are changing the relationship that existed previously between the education systems and authors and producers.

Do you agree with that? Is that planned or is it a poor interpretation of the bill?

Ms. Monteith: For educational purposes, the bill proposes two main things. First, it adds education as a fair use of the material, which will now be permitted for that purpose. Some current exceptions in education will now be modified or broadened by the bill. We recognize the fact that education is important in our society, for innovation purposes and to reflect technological advances that, for example, now require the use of digital material available online on the Internet or even films, are now permitted in an educational, school setting for educational purposes.

The provisions in the bill have been put in place, taking into account the rights of authors and including some limitations or restrictions to rightly respect those rights. The intention is not to change the relationship, but to permit a better use of the material available in the educational setting.

Senator Massicotte: You undoubtedly heard the testimonies that we received. A number of suppliers of these products told us that contracts have been cancelled and that some universities are preparing to have access to these products without paying the licensing fees. Do you agree with that statement? Is it a surprise? Was it planned as being a consequence of the bill?

Ms. Monteith: You are probably alluding to the exception that allows for the screening of films in educational settings for educational purposes. There will no longer be compensation for that.

For example, at present, the current Copyright Act allows a teacher to play a music CD in class or to put on a play. To reflect technological advances, a professor could now screen a film for students for educational purposes in the same way.

The objective of this is technological neutrality. It recognizes that, in fact, films, CDs or written theatre pieces can have interesting educational outcomes.

Senator Massicotte: When representatives from the Visual Education Centre informed us that there are serious consequences on their revenue, we were greatly surprised. Is it a consequence of a decision to ensure neutral technology?

Ms. Monteith: It is true that there are a number of stakeholders; the stakeholders and the parties that have been affected have all been consulted. We met with these various stakeholders and are aware of the various points of view, which were taken into account when this bill was being developed.

[English]

Senator Ringuette: Could Mr. Halucha indicate to me where the "neutral" is in Bill C-11?

Mr. Halucha: Where neutrality is covered?

Senator Ringuette: Yes, please.

Robert Dupelle, A/Senior Policy Analyst, Copyright and Trade-mark Policy Directorate, Industry Canada: It is under clause 35. The specific section if we are talking about the hosting safe harbour is in proposed section 31.1(4).

Senator Ringuette: What exactly does this do?

Mr. Dupelle: It is an important provision because it does not just relate to cloud computing and network PVR services; it is even broader than that. It is a fundamental part of the bill in terms of how the Internet will function. It ensures that there is a shelter from liability for an Internet service provider when they are hosting content. This also applies to the simple hosting of a website.

You can describe it as the third component part of Internet service provider safe harbours. The first one, under proposed section 31.1(1), deals with the Internet connectivity, providing people access to the Internet. Under proposed section 31.1(3), we are covering off an activity called caching, which Internet service providers do for efficiency's sake. Under proposed section 31.1(4), we are covering off the activity known as hosting. That is providing the means for the storage and for the communication of that work. The ISP's role is in terms of facilitating that storage and facilitating that communication by the person who stores it.

Senator Ringuette: They are very concerned. You have to understand that the industry withholds investing millions of dollars — not billions of dollars — in creating this fictional cloud storage. They indicated that they would like to see a clarification in the proposed section 31.1(4) that would say before the last sentence of that clause "and the transmission of the work or other subject matter to the person who stores it."

They find that would really clarify and remove doubts that there could be court challenges against them. What do you think?

Mr. Halucha: I would say two things. First, in terms of the amount of money that they will invest, there will be huge profit opportunities to —

Senator Ringuette: No. We are talking about what they would like to see changed in proposed section 31.1(4).

Senator Massicotte: Is their concern valid?

Senator Ringuette: In other words, it is to make sure that there will be no pursuit from creators. What do you think of the change that they want?

Mr. Halucha: Our view is that it is not necessary. In fact, the clarity they are seeking is already in the bill as it has been prepared. Hence, there is no requirement to make additional changes to add additional charity to it. It is clear.

Senator Ringuette: You are sure of that?

Mr. Halucha: There will not be any framework policy that reduces risk down to zero. If you are asking if there is zero chance that there will ever be a legal challenge on this, I cannot give that assurance. However, we have done extensive analysis on it and in our view, we looked at it from a number of angles and it provides the assurances.

In fact, reading the testimony today, the comments that I read into the record — the comments that I gave — were similar to the description of the conditions in one of the stakeholders' testimony early in the day around the three elements. All three, in our view, are in the act.

Senator Ringuette: Okay. You are on the record now.

Another major issue that I found was with regard to education.

[Translation]

Ms. Monteith, when you talk about equitable education in the bill, you make no distinction, with respect to public education, private education, vocational training, and so on. You are opening the door wide open to any kind of process that could be called "educational", be it in the private system, the public system or be it vocational training. There is no distinction. So the authors of the material will receive no compensation.

Ms. Monteith: This fair dealing in education clause applies to structured educational institutions.

Senator Ringuette: "Structured" — that can be public or private.

Ms. Monteith: It can be broader than just schools.

Senator Ringuette: That is it. In the bill, there is no mention of the education system you are referring to. So the door is wide open to any entity whatsoever that says that it used the material for educational purposes.

Ms. Monteith: So I believe that the key words here are really "for educational purposes".

Senator Ringuette: Yes, but define them!

Ms. Monteith: Educational purposes are pedagogical purposes.

Senator Ringuette: In what setting, Ms. Monteith?

Ms. Monteith: In various settings: public, private. However, the purpose must very clearly be educational.

Senator Ringuette: That is it. You have answered my question by confirming that you have not really considered the various educational scenarios.

Ms. Monteith: It is important to say that there are also constraints with respect to fairness. There are six factors in the jurisprudence, factors established by the Supreme Court that are taken into consideration when we determine whether the use of the material is fair or not.

Senator Ringuette: Therefore, the creators will have to sue organizations that use the material in education so that the court can determine the six factors. Is that what you are telling us?

Ms. Monteith: The six factors have already been established.

Senator Ringuette: Yes, but they need to be reviewed by someone!

Ms. Monteith: The six factors were established by the Supreme Court, which gives the terms of reference within which fair use may occur.

[English]

Senator Moore: Thank you, witnesses, for being here. I want to follow up on the questions of Senator Hervieux-Payette with regard to the fair dealing for educational purposes.

We heard evidence from various witnesses, and again this afternoon, with regard to the way that studying has changed in universities. Students do not buy textbooks as they used to but professors photocopy various portions of texts written by writers and put together what are called "course packs." From whichever one of you knows, tell me please, with clarity, that the writers of those texts will be compensated for their creations and how that will be done under this act.

Mr. Dupelle: Each provision proposed in the bill has specific limitations. For instance, fair dealing for education is constrained by the fairness test.

With respect to the course packs in particular, I think it is worth noting that there is a provision in the bill which provides for the digital delivery of course materials but it is subject to compensation. It is connected to what at the time was the existing licence for the photocopying of material. The provision extends it to the digital era so that the material can be digitized and sent to students in remote locations.

At this time, someone alluded to the changes in terms of negotiations between access, copyright and schools. It is worth noting that two prominent organizations, the Association of Universities and Colleges of Canada and the Association of Community Colleges of Canada, have negotiated model licences with Access Copyright and some schools — a few schools so far — have signed licences with Access Copyright. This is something that takes place in terms of the market. The schools and Access Copyright are negotiating.

The bill will not completely dispense with the purchasing of educational material. Fair dealing will not permit the mass copying of textbooks. There are certain uses that are permitted. Licensing is continuing and schools purchase vast quantities of information through site licences.

Senator Moore: With regard to the creation of a digital course pack, who monitors that and receives money and gets it to the creators?

Mr. Dupelle: If it is done pursuant to a school that has signed the licence with Access Copyright, for example, or an entity that decides to sign the model licence, the terms and conditions in terms of the copying will be governed by the licence.

Senator Moore: We heard today that schools are now waiting for the Royal Assent of this bill, whereupon they will adopt a position of fair dealing and not sign the model agreement with Access Copyright. It is probably like everything else, once one or two get brave and do that, it will probably extend through the whole of the post-secondary and perhaps the college structures in Canada.

Again, I find this incredible that you have people who are involved in the ultimate virtue of the transfer of knowledge advocating a position to take away from those who are writing and creating that knowledge.

How are these writers and creators going to be covered off in that situation? Let us say half or more of the universities decide not to do this and enter into an agreement. How will you make sure that those writers get their fair payday?

Mr. Dupelle: I think ultimately whether a school decides to sign a licence with a collective will be a determination they will have to make based on whether they think they do not need to use the works in their repertoire because perhaps they have felt there is sufficient coverage under, say, the database licence arrangements they have made with publishers directly. If they think the copying they will be engaging in will require a licence from a collective society, then ultimately it will be up to them to decide whether they will seek that licence.

Senator Moore: Do you think the provisions of proposed section 29 require post-secondary institutions and colleges to sign a model agreement, thereby protecting the creators?

Mr. Dupelle: I do not think it is just a question of what is covered by fair dealing because fair dealing is constrained by the fairness assessment. There are other considerations at play. There is the direct licensing to which a representative from the Council of Ministers of Education had referred. There are others resources they purchase that are acquired through different licensing arrangements. It is not simply a question of fair dealing and schools will never have to licence for anything ever again.

Senator Moore: I know. Those are separate licensing agreements and they will ensure that the creators get something, that they get their fair compensation. I am not talking about that. This is a much larger block of use. I do not hear from you any guarantee that the creators of the materials being used for educational purposes will be compensated and that bothers me deeply.

The Chair: Do you have any comment, Mr. Dupelle?

Mr. Dupelle: I would just reiterate the point that several universities have signed agreements with Access Copyright, and two prominent organizations have negotiated model licences with Access Copyright that other schools could choose to sign.

The Chair: Thank you very much.

Senators, we will now suspend. It has been half an hour. That is exactly what we indicated we would spend. We are now suspended until eight o'clock.

(The committee suspended.)

——————

(The committee resumed.)

The Chair: It is eight o'clock. Would the committee consider going through the clauses one by one? Those for which further discussion will be asked can be set aside and dealt with once we have gone through all the clauses. Would that be appropriate?

Senator Massicotte: Maybe we will not agree, but I would benefit quite a bit from having an open discussion about three or four issues that we talked a lot about. I would not mind hearing your views as to why or why not. I suspect that we will agree with the bill as it is, but we could discuss how to seek those further improvements.

The Chair: You are speaking on your own, I assume. What we would prefer to do is go through the clause by clause and then have a discussion on whatever you would like.

Senator Moore: That sounds decent, chair, but I do not want us to get there and be told like last time, which I do not think should have happened and which could have been avoided, that there will be no consideration of the possibility of observations.

The Chair: We will have a discussion.

Senator Moore: Thank you.

The Chair: Is it agreed that the committee proceed to clause-by-clause consideration of Bill C-11, an Act to amend the Copyright Act?

Hon. Senators: Agreed.

The Chair: Shall the title stand postponed?

Hon. Senators: Agreed.

The Chair: Shall the preamble stand postponed?

Hon. Senators: Agreed.

The Chair: Shall clause 1, which contains the short title, stand postponed?

Hon. Senators: Agreed.

The Chair: Shall clause 2 carry?

Hon. Senators: Agreed.

The Chair: Shall clause 3 carry?

Hon. Senators: Agreed.

The Chair: Clause 4?

Hon. Senators: Agreed.

The Chair: Clause 5?

Hon. Senators: Agreed.

The Chair: Clause 6?

Hon. Senators: Agreed.

The Chair: Clause 7?

Hon. Senators: Agreed.

The Chair: Clause 8?

Hon. Senators: Agreed.

The Chair: Clause 9?

Hon. Senators: Agreed.

The Chair: Clause 10?

Hon. Senators: Agreed.

The Chair: Clause 11?

Hon. Senators: Agreed.

The Chair: Clause 12?

Hon. Senators: Agreed.

The Chair: Clause 13?

Hon. Senators: Agreed.

The Chair: Clause 14?

Hon. Senators: Agreed.

The Chair: Clause 15?

Hon. Senators: Agreed.

The Chair: Clause 16?

Hon. Senators: Agreed.

The Chair: Clause 17?

Hon. Senators: Agreed.

The Chair: Clause 18?

Hon. Senators: Agreed.

The Chair: Clause 19?

Hon. Senators: Agreed.

The Chair: Clause 20?

Hon. Senators: Agreed.

The Chair: Clause 21?

Hon. Senators: Agreed.

The Chair: Clause 22?

Hon. Senators: Agreed.

The Chair: Clause 23?

Hon. Senators: Agreed.

The Chair: Clause 24?

Hon. Senators: Agreed.

The Chair: Clause 25?

Hon. Senators: Agreed.

The Chair: Clause 26?

Hon. Senators: Agreed.

The Chair: Clause 27?

Hon. Senators: Agreed.

The Chair: Clause 28?

Hon. Senators: Agreed.

The Chair: Clause 29?

Some Hon. Senators: Agreed.

Some Hon. Senators: On division.

The Chair: Clause 29, on division.

Clause 30?

Hon. Senators: Agreed.

The Chair: Clause 31?

Hon. Senators: Agreed.

The Chair: Clause 32?

Hon. Senators: Agreed.

The Chair: Clause 33?

Hon. Senators: Agreed.

The Chair: Clause 34?

Some Hon. Senators: On division.

The Chair: On division.

An Hon. Senator: What clause is that?

The Chair: That is clause 34.

Clause 35?

Hon. Senators: Agreed.

The Chair: Clause 36?

Hon. Senators: Agreed.

The Chair: Clause 37?

Hon. Senators: Agreed.

The Chair: Clause 38?

Hon. Senators: Agreed.

The Chair: Clause 39?

Hon. Senators: Agreed.

The Chair: Clause 40?

Hon. Senators: Agreed.

The Chair: Clause 41?

Hon. Senators: Agreed.

The Chair: Clause 42?

Hon. Senators: Agreed.

The Chair: Clause 43?

Hon. Senators: Agreed.

The Chair: Clause 44?

Hon. Senators: Agreed.

The Chair: Clause 45?

Hon. Senators: Agreed.

The Chair: Clause 46?

Hon. Senators: Agreed.

The Chair: Clause 47?

Hon. Senators: Agreed.

The Chair: Clause 48?

Hon. Senators: Agreed.

The Chair: Clause 49?

Hon. Senators: Agreed.

The Chair: Clause 50?

Hon. Senators: Agreed.

The Chair: Clause 51?

Hon. Senators: Agreed.

The Chair: Clause 52?

Hon. Senators: Agreed.

The Chair: Clause 53?

Hon. Senators: Agreed.

The Chair: Clause 54?

Hon. Senators: Agreed.

The Chair: Clause 55?

Hon. Senators: Agreed.

The Chair: Clause 56?

Hon. Senators: Agreed.

The Chair: Clause 57?

Hon. Senators: Agreed.

The Chair: Clause 58?

Hon. Senators: Agreed.

The Chair: Clause 59?

Hon. Senators: Agreed.

The Chair: Clause 60?

Hon. Senators: Agreed.

The Chair: Clause 61?

Hon. Senators: Agreed.

The Chair: Clause 62?

Hon. Senators: Agreed.

The Chair: Clause 63?

Hon. Senators: Agreed.

The Chair: Shall clause 1, which contains the short title, carry?

Hon. Senators: Agreed.

The Chair: Shall the preamble carry?

Hon. Senators: Agreed.

The Chair: Shall the title carry?

Hon. Senators: Agreed.

The Chair: Shall the bill carry?

Some Hon. Senators: On division.

The Chair: Does the committee wish to consider appending observations to the report?

Some Hon. Senators: Yes.

The Chair: May I have a motion to go in camera to consider a draft report, subject to the motion that staff remain?

(The committee continued in camera.)