Proceedings of the Standing Senate Committee on
Transport and Communications

Issue 17 - Evidence - Afternoon Session


OTTAWA, Monday, April 21, 1997

The Standing Senate Committee on Transport and Communications, to which was referred Bill C-32, an Act to amend the Copyright Act, met this day at 12:30 p.m. to give consideration to the bill.

Senator Lise Bacon (Chair) in the Chair.

[English]

The Chair: Our next panel of witnesses includes representatives from Union des artistes, the Alliance of Canadian Cinema, Television and Radio Artists, Guilde des musiciens du Québec, and the American Federation of Musicians of Canada and the United States.

Please proceed.

Mr. Ray Petch, Vice-President (Canada) American Federation of Musicians of the United States and Canada: Thank you for affording us the opportunity to speak to you today. My name is Ray Petch. I am the vice-president for Canada of the American Federation of Musicians of the United States and Canada.

The AFM embraces 300 locals and 125,000 members in both the United States and Canada. In Canada, the AFM is comprised of 28 locals whose membership consists of 17,000 professional performing musicians. The Guilde des musiciens du Québec is Local 406 of the American Federation of Musicians and represents members in that province. We have been asked to appear today on behalf of Local 406, who we understand was also invited to attend this committee.

The AFM congratulates the Government of Canada on the foresight it has demonstrated in structuring the bill, in particular, those sections which propose a levy on blank audio recording media, and additional rights which will recognize and reward those Canadian producers and performers who have for many decades provided world-class recorded music without adequate recognition and compensation from the commercial utilization of their products.

Other than royalty artists who may negotiate royalty contracts with producers or record labels if they have commercial bargaining power, Canadian performing musicians receive only the compensation stipulated in the phonograph recording agreement and the accompanying special payments fund agreement. These payments run their course over a five-year period irrespective of future sales or commercial record play. Royalty agreements are not negotiated on behalf of freelance musicians who accompany artists.

Additional payments are generated only when the contracted sound recordings are utilized in another medium such as film, video tape, commercial announcements, theatres, CD-ROMs, et cetera.

Performing musicians whose contracted sound recordings have a sales life exceeding five years do not receive any compensation for future sales, nor do they receive compensation for air play or commercial use.

In order to improve the above described economic standing of professional musicians in Canada, the AFM suggested a number of revisions to the first draft of the bill in a written submission filed last summer with the Canadian Heritage Committee.

We were grateful to have the opportunity to further address our points before the standing committee last October. All our recommendations are driven by one main objective, ensuring that performers finally obtain copyright protection which would generate more than de minimis compensation for their significant contribution in sound recordings. We were pleased to see some of our concerns addressed in the second draft of Bill C-32, which is now before you.

Some of the AFM's concerns with the bill remain. The most notable of these is the $100 flat fee royalty for small broadcasters. This will not generate sufficient amounts to justify the creation of a collective.

There is a more pressing concern today, namely, that this bill, although imperfect and somewhat flawed, must not die on the table in the wake of a coming election call. Our sole message today is that Bill C-32 must pass so that performers such as those represented by the AFM will get the substantive protection under the Copyright Act which they have been denied for so many years.

The need for performers' rights has been studied in Canada for well over a decade. The topic was included in the 1985 report on copyright reform titled "A Charter of Rights for Creators".

The last two governments have conducted studies, consulted with the relevant parties in the industry, prepared a confidential draft of proposed legislation and made a commitment to artists, performers and producers that legislation will be passed. The time for study has passed. We congratulate the present government for finally tabling a bill that includes this crucial protection for performers and for bringing it this close to fruition.

Now that we are close, we must not lose the opportunity to have royalty rights for performers legislated. Canadian musicians need these rights now. They cannot afford to go back to square one in the legislative process and wait years to return to this point.

If recording artists are to improve their economic position significantly in Canadian society, particularly in this era of severe cut-backs in public funding, they must have a copyright. This performer's right must have sufficient economic rights attached to it which can be exploited in the marketplace, entitling them to receive reciprocal royalties from other Rome Convention countries in which their recorded performances are sold and performed.

As most people know, the Canadian recording industry`s international presence has been rapidly increasing in recent years. The nominations list at last year's Grammy Awards is a testament to this fact. Musicians have earned recognition and protection under the act for that contribution. It is long overdue by a full decade.

There is a second major reason why Bill C-32 must pass. It is the first bill since 1988 to attempt significant substantive and structural changes to Canada's ageing Copyright Act which dates back to 1924.

Modernizing the act creates a stepping stone to further amendments urgently needed to address the increasing use of new technologies such as Internet, multi-media and the information highway. The inclusion of the mandatory review period of five years is indicative of this bill's importance. It will ensure the acceleration of copyright reform to meet creators' and users' needs in the new information age.

Consideration of these issues on an international scale has already begun, for example, at the meetings held last December under the direction of the World Intellectual Property Organization.

For all of the aforementioned reasons, we urge the Senate not to recommend further changes to Bill C-32 but rather to pass it and pass it quickly. Any inequities that may emerge can be addressed in the next phase of reform.

Let Canadian performers move forward.

Mr. Alexander Crawley, President, Alliance of Canadian Cinema, Television & Radio Artists: ACTRA represents approximately 10,000 freelance performers and broadcast journalists working throughout the recorded media in every region of Canada, primarily in the English language.

We support everything Mr. Petch has said.

I did not bring a written brief today. Our copious briefs are available to you. Our purpose today is to give you a simple message: It is time for this bill to pass. The Senate will do us a great service if it moves forward expeditiously.

As you heard from many of our colleagues, Bill C-32 is not a perfect bill. However, there are some brilliant public servants working in this area who, while faced with the difficulties of two ministries playing tug of war with this bill, have accomplished something quite extraordinary. Bill C-32 is a step that we must take. It is a step in the right direction, particularly from the point of view of creators and performers. There is much more work to do, as I am sure you all know. Both Industry Canada and the Department of Canadian Heritage have acknowledged, in the process of putting together this bill, that the new technologies have not been addressed. We must move forward.

I have participated in some of the international meetings, along with a number of my colleagues who are here. There is an important role for Canada to play. We take a leadership role by stepping in the direction of this bill. We urge you to pass it.

The particular statutory recognition for audiovisual performers is that small step in the right direction that is so acutely needed. It will become an important and significant issue in the international arena. It is important that we take this step now. Thank you.

[Translation]

Mr. Legault, First Vice-President, Union des artistes: Madam Chair, I am here today to represent 5,000 French-speaking performers in Canada, at least, because there are more than that.

I would like to say that what you have heard over these past ten days is the faithful reflection of what we have experienced for close to ten years, with the exception of the decibel level which has declined remarkably since the bill was entrusted to you. I think that one must see in this more moderate tone the exchanges have taken on either the soothing influence you exercise over people, or a sign of the generalized fatigue felt by the combatants. I can tell you without any doubt, however, that the road that led us to you has been arduous, confrontations have been intense, and debates have been very heated.

The bill you have before you is the outcome of those confrontations and debates between two diametrically opposed points of view, those of the copyright owners and those of the users of works protected by copyright. Thus, one should not be surprised by the divergent opinions on the worth of the bill, which depend on the group one belongs to.

Our friends from ADISQ talked about the principles that underlie copyright and neighbouring rights. We would like to go back over those concepts that are in our opinion essential if one is to understand this issue.

As you know, intellectual property is no doubt the type of property that is subjected to the most systematic and flagrant violations. When you mention property, people tend to think of a concrete, real and tangible object. If I own a piece of land, for instance, not only can I dispose of it as I like but I can fence it and put up signs that say: "Private property. No trespassing".

But in the case of intellectual property, not only are there no fences or signs, but by its very nature and function it is meant to circulate as widely as possible. Thus, confusion is easily created between the work -- a creation, a performance, a production -- and the medium it has been recorded on -- the book, cassette, or disc. That is why you have heard several users -- and not the least of these -- come here to claim as their due the right to use as they please something they consider belongs to them. After all, they stated in all seriousness, I purchased this book or this disc, I have the right to use it as I see fit.

And yet, those users know full well that the simple fact of purchasing a book, the container, does not suffice to make them the owner of the work -- the content. If that were the case, all one would have to do is purchase the book to appropriate the authorship of the story, which is forbidden. That would be plagiarism and there are recourses against such a violation of copyright. But insofar as changing the content, exchanging it, renting it or reproducing it without authorization, users seem to be seized with a kind of collective amnesia. They easily "forget" that the work does not belong to them. A creator then has only one recourse -- the Copyright Act, which can be used to bring users into line.

The same thing applies where discs are concerned. Everyone knows that it is illegal to copy them for resale on the market. This is called piracy and there are recourses against such practices. But when it comes to using the content of the disc without authorization, to exploiting it for commercial purposes or to making copies of it for friends, once again, a type of fog seems to envelop the mind of users. After all, they say, I paid for this recording, I can do whatever I like with it!

Indeed, as long as they have paid for it, they can do whatever they like with the physical medium the work has been transferred to; they can frame it, melt it, use it as a frisbee. But they don't have the right to claim that they are the author of the words or the music of a song, or to use it without authorization and without paying the requisite fees. Further, if this bill is passed, the same principle will finally apply to the work of artists and musicians performing those same songs. They also will be protected against the unauthorized use of their performances, as is the case already in 52 countries throughout the world.

Just as broadcasters pay user fees to the composers and writers of the songs they play on the radio, they will pay fees to those who perform those songs and to the producers responsible for making the discs.

Thirty-six years after the adoption of an international treaty on this matter, if you approve the bill that is before you, Canadian legislation will finally recognize the rights of performers over their performances.

You will easily understand that under the circumstances Canadian performers and musicians are among those who are asking you to adopt Bill C-32 as it stands as quickly as possible.

Mr. Serge Turgeon, Outgoing President and active member of the Union des artistes: Madam Chair, many users have come here to tell you that you should amend the bill, that it suffers from an imbalance that favours creators, an imbalance they claim you would have the power to correct through small amendments here and there.

I must first of all say that the very notion that a piece of copyright legislation might be suffering from some form of imbalance in favour of authors is quite disturbing. Just as disturbing as the fact that those who benefit the most from the use of those works are the first to ask for the privilege of massive exceptions.

We must not forget that each exception to the Copyright Act constitutes an expropriation of that right, and that no expropriation can be justified without serious grounds or reasonable compensation.

I simply want you to think about what your reaction would be if a law stipulated that you, as the owner of a piece of land, had the right to set conditions governing access to it, except in the case of its use by school groups that could have free access to it for educational purposes. Such a bill would not get through first reading in the other place. All of the property owners in Canada would put up a hue and cry to condemn such an infringement of their property right.

This is, in part, what copyright owners did in the present case. But since the property concerned is "only" intellectual property, it seems that Canadian youth does not have to learn respect for that type of property as it does for other types of property. Personally, I am dismayed by this, just as I am dismayed to note that Canadian broadcasters still dream of having the best of both worlds, that is to say a Canadian market that is entirely reserved to them but in which the copyright rules that prevail in the United States would apply here.

You know that American legislation does not show much regard for creators and performers. It is in fact quite amusing to note that the CAB recognizes that fact itself in Appendix B of the brief it submitted to the committee last week. In a comparative table of the treatment of eight measures relating to copyright in the United States and in Canada, the CAB document describes statutory damages in these terms: "the one thing the US does have to help creators", in other words, the only thing that Americans recognize that is to the advantage of creators. You will understand that the ideal world as conceived by the Canadian Association of Broadcasters is not quite the same as the one we would like to see.

It is also understandable that in their minds the enormous concessions they have obtained in exchange for recognizing our rights are insufficient. They will always feel that way, since without the passage of Bill C-32, they could continue to live in a blissful world where they can profit freely from someone else's work -- that of performers and record producers.

And yet, Madam Chair, those concessions are far from being negligible. Earlier, you heard the representatives of ADISQ explain the nature and scope of the exemptions granted to broadcasters. Two thirds of Canadian radio stations will only have to pay $100 a year to producers, artists and musicians in full payment of the rights they hold. One hundred dollars for everyone! Producers and performers will have to divide this amount fifty-fifty. This means that two thirds of Canadian radio stations will discharge their obligation to performers and musicians for the modest sum of 13 cents a day for all performers and artists. And all radio stations will benefit from this exception on the first 1.25 million dollars in publicity income. Just between us, isn't that what is known as a sweet deal?

In spite of that, broadcasters are continuing to challenge the validity of those rights. They would like to see them limited by discriminatory criteria. They also complain of discrimination where they are concerned, because they have to pay certain rights when collective societies that can negotiate conditions with them exist. That is really the limit, wouldn't you say?

Before the existence of collective societies, users very rarely paid if they infringed copyright. They had a ready-made excuse. They said that it took too long to find the copyright owners and that it was too complicated to negotiate each use of a given work. In short, they seemed to be saying that if only authors simplified things for them, they would have been delighted to pay them their due.

So the copyright owners said to them: "Very well, we will simplify your existence by getting together in collective societies. You can then negotiate licences giving you access at a reasonable cost to broad repertories of works without fearing legal action because of violations of the copyright on those works."

And do you think the users were satisfied by that? Of course they weren't. After having invoked the impossibility of finding rights owners to pay them, now they are crying poor. They accuse collective societies of using monopolistic practices and demand more and more exceptions to their obligations. Which just goes to show that it is easier to say that one would like to pay than actually to pay those rights, even when the sums involved are minimal.

You should also not be surprised if users came to tell you that Bill C-32 suited them better before the work done by the Canadian Heritage Committee. It is easy to understand them; they had obtained an extremely broad regime of exceptions, and in the case of broadcasters and manufacturers of blank tapes, the inclusion in the bill of criteria that were clearly discriminatory toward us, without the amendments made to correct some of those abuses -- amendments that were the outcome of representations made in a perfectly legitimate and transparent way before the Heritage committee, I might add. Without those amendments, Bill C-32 would never have made it before you, because of the opposition expressed by creators, performers and record producers at the scope of the exceptions granted to the users of their works.

And yet, several users came to tell you about the original version of Bill C-32 was the perfect piece of legislation, such as had rarely been seen in the history of Canadian legislation. They came to ask for amendments to bring Bill C-32 back to its original state of perfection, so to speak, before it was completely distorted, in their minds at any rate, by the amendments that were asked for at committee stage.

The manufacturers of blank tapes and the Canadian Consumers Association came to tell you that they love artists and wish them all the best -- as long as they do not have to contribute anything. In other words, they are all for virtue, as long as no one expects them to be virtuous. They feel Bill C-32 would be excellent if it did not concern them in any way.

You will have understood that in both cases they are resorting to hyperbole; I think that is the right term. It is false to claim that Bill C-32 was perfect when it was first introduced. If that were the case, one has to wonder why it gave rise to such a flood of proposed amendments. I have not counted the total number of amendments that were asked for, but I am sure there were many more than the final number of amendments granted.

The Heritage Minister Ms Copps was well aware of the fact that the bill needed adjustments when it was introduced in the House. In reply to a question from the Official Opposition she in fact stated that she was counting on the work of the committee to make the necessary improvements.

Mr. Legault: Does the Union des artistes feel that Bill C-32 as it stands is now perfect? No, of course not. The bill still recognizes our rights on the basis of an unacceptable distinction between sound performances and audiovisual performances. Moreover, the fee that will be levied on the audio medium alone will spare recording devices. The principle of free negotiation between rights owners and users is distorted by the introduction of a slew of exceptions to protected works.

Since I have no experience in this field myself, I am tempted to ask you respectfully if you often have the pleasure of seeing a perfect bill appear before you? I suspect that if you had to wait for a perfect law before passing it, humanity would be living in complete anarchy.

In this case, I believe the representative of the Canadian Copyright Institute was quite right when he said to you the other day that the time comes when one must stop asking theoretical questions and submit the bill to the real test, that of reality. Like him, I think that after ten years of reflection that is the only way of finally discovering the real value of this phase of the review.

When she referred the bill to the Standing Committee on Heritage for study, the Minister of Canadian Heritage stated that:

Copyright is first and foremost a matter of fairness and equity. Copyright is simply what is due to creators for their work.

The other day, before you, she added that:

We cannot allow ourselves to lose the fruit of almost ten years of labour. On the contrary, we must seize this opportunity of passing framework legislation that serves the general good.

The Union des artistes shares that opinion. We feel that Bill C-32 as it stands is a first step toward reaching the objectives of justice and equity that must be the purpose of the Copyright Act. Moreover, it respects the government's will to affirm a broad balance between protecting the rights of creators, performers, and producers, and providing access those who use their works.

In other words, it makes possible the attainment of certain fundamental objectives that were pursued both by creators, performers, sound recording producers and those who use their works when they undertook this phase of the review of the Act close to ten years ago.

And it is precisely because all of their objectives have not been reached that we are impatient to move on to the next phase.

Mr. Turgeon: Some have pointed to the imminent dissolution of both Houses of Parliament to emphasize the urgency of passing Bill C-32.

The truth behind this argument is undeniable. The perspective of failure is heartbreaking for artists and performers who have been waiting for the recognition of their most fundamental rights for a very, very long time. The delicate balance of concessions would of course collapse and we would have to start all over again from the beginning.

Along with the importance of that argument, I think there is another argument that must be mentioned that has nothing to do with election dates, and that is the urgency of adapting Canadian legislation to contemporary reality.

For artists and performers, of course, Bill C-32 is 36 years overdue, if one compares it to the 1961 Rome Convention; we are in 1997. We are at the dawn of the 21st century and the rest of the planet has not been simply marking time during all those years.

The digitalization of data and the most recent technical developments mean that media already exist on the market that can receive sounds, fixed images or moving images, synthesized images or images taken from preexisting works, indiscriminately. We expect that in 1997 we will see the widespread marketing of an erasable and reusable medium that will be usable either for sound recordings or audiovisual recordings. In fact, the consumer will be able to create his own montage of sounds and images, assembling on the same medium copies of films or film excerpts, with copies of sound recordings or excerpts of these, without regard to the sound-image distinction in the bill. That is what I call the genetic manipulation of our works.

Moreover, the unauthorized broadcasting of our works through the Internet is a practice that exists already and that will become more and more widespread if legislation does not give us all the necessary tools to fight it.

So the future has already caught up with us and it is essentially for that reason that when the Union des artistes appeared before the Standing Committee on Canadian Heritage, it proposed that the provisions concerning the review of the Copyright Act be tightened in order to avoid having another decade go by before the finalization of the three phases of the Act's review. We are making that same recommendation to you in order to avoid further delays such as those we have seen in the past.

Mr. Legault: In conclusion, respecting the property right of the creator and of the performer over their work constitutes an essential condition to maintaining and developing creation and the cultural identities that are incorporated in it.

It is now up to you to see to it that the Canadian Copyright Act takes this decisive step forward. Canadian artists and interpreters are placing their trust in you to see to it that Bill C-32 is passed as it stands, without further delay.

Senator Grimard: I thank you for your very interesting presentation. We are happy to note that you are unanimously in favour of having the bill that is before us passed as rapidly as possible, in spite of the fact that you are aware, as we are, that there are imperfections in it.

Before asking you my question, I would like to join my colleague in congratulating Mr. Turgeon, who, for over a decade, was the President of the Union des artistes which he turned into a homogeneous and credible organization. I think you deserve to be congratulated for that. Also, I read that you had become Director General of the Théâtre du Rideau vert after retiring as President of the Union des artistes. I wish you all the best in that new career.

I might have preferred that your theatre be called le Rideau bleu (the Blue Curtain), but my friends across the way would have preferred le Rideau rouge (the Red Curtain); but with green, you can't go wrong, since it stands for hope.

I would like to ask you a question. I read Michel Vastel's column, and I am thinking of last Friday's article in particular.

Mr. Turgeon: Me too.

Senator Grimard: One hears about it in the morning, on the six o'clock program. I'll quote what he said, word for word:

...the new Canadian copyright regime has been custom-made for Quebec artists...

Do you think, Mr. Turgeon, that that will be the effect of the adoption of the bill that is before us today?

Mr. Turgeon: Thank you for your kind words. Before I accepted the presidency of the Union des artistes I had said that I was an artist before being president, and that I would remain one afterwards. I am still one. To answer your question, I do not think that will be the perception, and if it is, it will be a false perception because this battle has been waged by all Canadian artists, all performers, together from one end of the country to the other.

Perhaps we made a bit more noise in Quebec. That is possible but it is the only reason I can think of that would explain that perception. I am very surprised. You know that for professional reasons I read a lot of articles, a lot of newspapers. I am surprised that a supposedly well-informed journalist would repeat such a perception.

Senator Grimard: I have finished. I have done my duty this morning. I want my colleague Senator Roberge to replace me. I have done rather a good job, he will have to admit.

The Chair: You did good work, but before yielding the floor to Senator Roberge, I would, like all of the senators of this committee, like to congratulate Mr. Turgeon for his work. I will not add any more than that because we know each other well, but I also want to wish him all the best on our behalf for the new season in the new position he has accepted.

Senator Roberge: Do we have any idea of the additional remuneration neighbouring rights could mean for artists, firstly, and secondly, what would the levy on tapes amount to for artists?

Ms Lucie Beauchemin, Public Affairs Consultant, Union des artistes: As our friends from ADISQ were explaining earlier, it is very difficult to answer that question now because we must appear before the Copyright Board to support our claims and to reply to the cassette manufacturers, or blank tape manufacturers, and broadcasters, who as you know have obtained enormous concessions but are still making certain claims with regard to our rights.

Thus, I cannot answer you in terms of absolute numbers. There is something I can say, however, and I would like to quote our friend Marie-Denise Pelletier, the singer, who appeared with us before the Canadian Heritage committee in this regard. Marie-Denise raised an important point, I think. People often have the impression because they hear a record often on the radio that there is a corresponding volume of sales of that recording to the public, which is not the case.

It often happens that for certain artists, real success is measured by the popularity of their work on the airwaves, which is not necessarily accompanied by sales success. That is one thing.

The other aspect that must not be forgotten is that in some cases there is the phenomenon of the flash in the pan career that is limited to the remarkable success of a recording which is unfortunately not followed by equally successful subsequent recordings. Those artists then suffer a steep drop in income. If a record is played a great deal on the radio but does not enjoy corresponding sales, those artists suffer an income shortfall that will never be made up.

Also, if the artist's career takes off on a meteoric rise, that artist will have the possibility of making money from his work at that point in his life. And a good part of that income will not be owing to him, at least as the Act stands currently.

It is extremely important for us that the bill be passed so that these income shortfalls can come to an end, even though the model chosen by legislators will not curtail these completely.

Senator Roberge: I missed ADISQ's presentation this morning.

[English]

Mr. Petch, we were told by the people who distribute and manufacture blank cassettes that they will probably go out of business within three years if Bill C-32 is passed. What is your reaction to that statement?

Mr. Petch: I can only react by saying that the same legislation in the United States has not caused anyone to go out of business.

Senator Roberge: The blank tapes are taxed, are they not?

Mr. Petch: The law is a little narrower than that. It applies only to certain types of tape. However, it has not caused anyone to go out of business.

After all, no-one knows what the levy will be. The levy has not been set. It will be set at a later date. They will have input into the setting of that levy. Frankly, that is a ridiculous statement.

Senator Roberge: Thank you. That is what I wanted to hear.

[Translation]

Ms Beauchemin: Just before our appearance, I gave a document to the clerk. Unfortunately, I did not have enough copies ready. I obtained figures from SORECA, the company in France that manages the collection of that levy on private copies. The cassette manufacturers who appeared before the committee are probably the same as the French manufacturers since they are multinational companies that manufacture cassettes throughout the world. They made exactly the same claims when the French law was brought in in 1986, the law that introduced the levy, not only on private audio copies but also on private audio-visual copies, which is not the case of the Canadian legislation.

I do not know if that four-page document has been distributed, but on the last page, there is an extremely instructive table on the evolution of the average price of cassettes between 1986 and 1997. If you look at the second table, you will see that, indeed, the price in 1987 went up slightly. Of course, once you have told everyone that prices are going to increase, you don't have a choice, you have to follow suit.

Afterwards, you will note that prices go into a constant decline, so that in 1996 they reached a level that was lower than the 1986 level. The explanation for that is very simple, it is that cassette manufacturers can distribute manufacturing costs over their worldwide markets.

They are not dealing with a captive market that depends, for instance, only on production here in Canada to amortize costs linked to the sale of the product. They have a worldwide market that allows them to distribute costs easily enough so that they can reduce prices when competitors try to gain a few points on the market. So, those fears are not borne out by the facts.

[English]

Mr. Crawley: Senator, I thank you for your question because it points out the hyperbole that we have heard on this file. We should view historically the development of giving any money at all to artists by broadcasters or by films. Radio was supposed to put the theatres out of business. The phenomenon of television was supposed to put movies out of business. Everyone will go out of business until they learn to make the adjustment.

This morning Ms Peacock and Mr. Frith talked about business solutions to the problems that arise, which is the way these things will be solved. Broadcasters were going to go out of business if we had a neighbouring right at all. They now seem to see that really will not be a problem.

Obviously, the institution of new rights for performers will slightly change current arrangements. However, the tiny increment that will flow will hardly put anyone out of business who deserves to be in business in the first place.

Mr. Petch: To expand on that point, in terms of the 13 cents that was discussed this morning as a daily fee for a small radio station, you have to keep in mind if that applies to a station which has the normal daily format of news, sports, weather, music, there are probably 10 recording cuts played per hour on that station. Over a 24-hour period, that is 240 cuts. If you have an average of only five musicians on each of those cuts, it would be in the 1,250 range, that is, 1,250 musicians who would share a royalty of 13 cents.

Mr. Crawley: Actually, it is only one-half of that.

Mr. Petch: No, it is 27 cents. Whether it is 27 cents or 13 cents, I doubt that any of my members will get rich off the royalty from small stations. Yet, we have not come to you today saying, "This is ridiculous. It must be amended." We have said, "We understand."

It seems to me we are playing fair. When you get people on the other side saying that this type of fee will put them out of business, I say again, sir, that is ridiculous.

Senator Roberge: It would be hard to buy a carton of milk with that amount of money.

We hope we have convinced the minister to institute a review within the first three years as opposed to the first five years. We will see this afternoon.

The Chair: Let us wait until the minister arrives.

Senator Roberge: In your opinion, what will be the effect of that on artists? Are you satisfied with this reduction in the revision time?

Mr. Petch: I am very much in favour of that reduction in time. It will take us more quickly to the other questions involving multi-media, the Internet and the information highway. Those are questions we must get to. There is an old saying along the lines of, there they go and I must hurry to catch up for I am their leader. I am afraid that all of us in this room are in that position with the Internet and multi-media. We must catch up.

I am very enthusiastic about reducing the five-year review to a three-year review.

[Translation]

Mr. Turgeon: I agree entirely. That is in fact something we asked for in our brief.

Senator Pépin: It was the review of the Act.

The Chair: In some of their presentations to this committee, witnesses expressed reservations about the fact that the Copyright Board will be subject to government control and will in fact have links with the government since it will set the level of royalties and tariffs. What is your perspective on that?

Ms Beauchemin: I think I could repeat what our friends from ADISQ said practically word for word. It goes without saying that if it were possible, I would like to see the inclusion of the list of amendments proposed by the Union des artistes that were not chosen. There were of course things we would have liked to see changed.

That being said, I think that the wording of clause 66.91 is sufficiently limitative. In any case, we will be able to judge, and if the revision does take place in three years rather than in five years, we will be able to see whether the power to issue directions is too broad and gives rise to situations that are harmful to the parties involved. It will be possible to make adjustments.

But it seems to me that because of the way the clause is worded, it should be possible to manage this power to issue policy directions in a very responsible way, so that this power will resemble the power the government has over the CRTC, in that it reserves the right to issue broad policy directions, and not intervene directly in the work of the Commission, which, after all, is a quasi-judicial body.

[English]

Senator Roberge: "Unlike the CRTC, which regulates many aspects... the Copyright Board's functions are limited to rate setting. The rate setting function is, in effect, a quasi-judicial interpretation of private rights that require copyright users to pay compensation for commercial use of owner's intellectual property."

[Translation]

These seem like enormous powers.

Ms Beauchemin: I am going to preach for my own bailiwick, for a moment. I heard the Broadcasters' Association say the other day, and I read in their brief, that they intend to ask the government to intervene to address in the Board's regulations some of their concerns that are not addressed in the Bill. I think we will have the opportunity of seeing in the coming months whether this type of process is used or not. The best way of knowing that will be to live with the Act for three years, and I hope it will not be more than three years so that we can indeed make adjustments if necessary.

When you study a bill that is as complex as this one and imagine all possible scenarios and try to foresee all of the problems that might arise, after a given time you become almost paranoid. It is part of our role to ensure that there aren't too many loopholes. You can only imagine so many scenarios before you finally tell yourself that there are certain things you will only find out in practice. I think this is one of those things we will be able to judge in practice.

The Chair: Do you have any other questions, honourable Senators?

[English]

Are there any comments you want to add?

[Translation]

Mr. Legault: Madam Chair, I would have one last comment. I would like to emphasize that this bill concerns sound recordings only and that many countries already have legislation governing not only sound recordings, but also the audio-visual field. If this bill, with your help, leads us out of the Middle Ages, we must nevertheless understand that in Canada, at the dawn of a new century, we still have gone no further than the Renaissance. We still have a lot of ground to cover, but this is a first step.

The Chair: I am tempted to say that folkloric beings like us will be able to help.

[English]

Are there any comments you wish to add?

Mr. Crawley: Madam Chair, I am very proud of my colleagues who are here. I did not have to write anything down. I did not have to say much at all. They have covered the territory. It is extremely important to pass Bill C-32. We will be most indebted to you if we get this bill passed and move on because there is considerable work to do in the future on all these issues. Thank you.

The Chair: Thank you very much for your appearance here today.

[Translation]

Thank you very much for being here. We are going to interrupt our work for about 30 minutes and we will then return to hear the minister and department officials.

The committee was suspended.

The committee resumed at two o'clock.

The Chair: We shall resume our study of Bill C-32. We have with us officials from the Department of Canadian Heritage, the Department of Justice, Foreign Affairs, and Industry and Commerce. Could you give us your names and make your presentations in the order you have agreed upon amongst yourselves.

Mr. Victor Rabinovitch, Assistant Deputy Minister, Department of Canadian Heritage: Madam Chair, I would like to introduce the colleagues who are with me today; to my left, Ms Danielle Bouvet, from the Department of Industry, Ms Suzan Katz, Department of Canadian Heritage, Mr. René Bouchard, Department of Canadian Heritage, Mr. Jeff Richstone, Department of Justice, who always makes sure that justice prevails in all of our discussions, Mr. Tom Zuijdwijk from the Departments of Foreign Affairs and Justice; he wears two hats.

[English]

Madam Chair, I appreciate this opportunity to say a few words. We hope to answer any technical questions which may arise on the bill. Our Minister of Canadian Heritage, Ms Copps, is expected here in an hour's time. She will be able to deal with the broader policy matters about which you undoubtedly will be asking.

I should like to bring one item to your attention, though. It is a matter which officials have discussed amongst themselves many times. We share it to give you complete knowledge of what we have been discussing.

A story has been circulated and repeated from time to time implying that government officials, and more particularly officials from the Department of Canadian Heritage, somehow took control of the proceedings of the standing committee of the House of Commons when this bill was being discussed clause-by-clause.

Frankly, I think it shows considerable disrespect for the abilities, knowledge, and work of the members of the standing committee to somehow imply that officials of the government, public servants, simply step in and take control of their proceedings. That is not physically, technically, legally or emotionally possible. For people to come before this committee or to make statements to the press suggesting that public servants somehow took control of those proceedings is simply inconsistent with the way things work.

During its clause-by-clause examination of this bill, 80 amendments were adopted by the standing committee. Of those, approximately 40 were substantive amendments. All of the amendments with which the standing committee dealt were amendments which had been brought to its attention or the attention of the members by intervenors who appeared before the standing committee.

There had been extensive discussion and debate, formal and informal, among the members of the standing committee before they went into their clause-by-clause study during which they worked out compromises, which, of course, they alone were able to do because they were the elected members actually voting on the clauses.

Much work went into the preparation for that clause-by-clause discussion by officials who are sitting here, other officials in this room, and officials who are not present. There were discussions, debates, and many hours of conversations between officials from the Department of Heritage and the Department of Industry Canada. That is natural; that is normal; that is what we are paid to do. We do not rubber-stamp. Elected officials do not rubber-stamp. Senators do not rubber-stamp. All of us debated and argued and worked on this, providing our best advice.

During the clause-by-clause discussions, some drafting work was occurring. People were moving around the room, trying to help members on both sides of the house find the exact words to explain and to legalize their compromises. That is a perfectly normal and usual way of doing things.

Madam Chair, I am taking advantage of the time given for a short opening remark to say simply that officials and public servants did what they were supposed to do. They did it wholeheartedly and they did it well. It is understandable if there was some confusion on the part of some of the observers from the general public or from journalists or others. Those people are not necessarily expert in the operation of committees. Some journalists must cover many subjects at any one time and they do not necessarily know how everything works.

No one should have the impression that the elected members did not know what they were doing. They did know what they were doing. As a public servant with many years of experience, I was truly amazed at the depth of understanding on the part of the elected MPs who were dealing with the issues at that time. I say that out of professional and personal respect.

If there are technical questions we are able answer, we would be delighted to answer them.

The Chair: If there are no other comments from the other officials, we shall proceed with our questions.

[Translation]

Senator Pépin: I would like an explanation. This morning, the Canadian Motion Picture Distributors Association told us that clause 58.1, on retroactivity, was flawed and could cause many problems. What would its impact be in your opinion? It was drawn to our attention.

Mr. Rabinovitch: We have often discussed these matters amongst ourselves. I will ask Mr. Bouchard to answer you.

Mr. René Bouchard, General Counsel, Copyright Board, Department of Canadian Heritage: I will give you a general explanation, and afterwards Mr. Richstone will continue with a more specific one. Clause 58.1 is an interpretation clause, which allows us to interpret how new rights contained in Bill C-32 will be introduced. More specifically, we are trying to strike a balance between those who will be receiving new rights and those who had those rights previously.

I will give you an example. In the area of sound recording, for instance, a certain number of contracts were signed before Bill C-32 came into effect.

In Bill C-32, the private copy and neighbouring rights regimes are recognized. Interpretation clause 58.1 states that as an artist, for instance, in previous negotiations you assigned your rights to the record producer, but you did so without knowing that there would be a private copy and neighbouring rights regime later. If it is not expressly stated in the contract that you have assigned your rights related to private copy and neighbouring rights under regimes to be introduced later, clause 58.1 simply says that we do not presume that you have abandoned your rights under those private copy and neighbouring rights regimes. This means that when you assigned your rights you assigned the rights that were known at that time and not those related to neighbouring rights and private copy.

Mr. Rabinovitch: The explanation is so perfect that I can't see what I could add to it. A similar clause that goes even further is contained in the current Act. When the 1921 Parliament introduced a new copyright regime, it also wanted to deal with domestic rights and clause 60 of that Act states that cessions that took place before 1921 were considered invalid where new rights were concerned. This is an interpretation clause which is more modest and places performers on an equal footing with the others concerned; those who signed contracts before a certain date will be on the same footing as those who will sign contracts after. This is a fairly modest interpretation rule.

Senator Grimard: Mr. Rabinovitch, I'm a bit surprised to see that you seem to excuse the process of the 76 amendments that came up on the last day of committee hearings on this bill in the other place.

Was there some obligation to have clause-by-clause study of the bill on the same day? Was there some urgency surrounding this clause-by-clause study? If there were three-hour meetings and 76 clauses were passed, this means one clause per three minutes. I have some trouble understanding this way of doing things without which, in fact, you would not have had to come here to explain what happened. I would appreciate hearing your answer.

Mr. Rabinovitch: The clause-by-clause study of the bill lasted between two and three days. It did not take place at a single meeting. It lasted quite a while. Second, and this is very important, the discussion among members of the committee lasted practically for the whole session. The hearings began in October and ended at the beginning of December, so they spanned a period of nine or ten weeks.

According to our experience as public servants, members asked questions, discussed matters together, sought answers and compromises. So, when the clause-by-clause study began it was really the end of a long process and not a sudden development. Of course, like any good public servants, it is not up to us to explain how members decided to do their work.

I want to explain clearly that for us as public servants this was a real process of debate, even amongst ourselves. It was a viable and even transparent process through which broad policy issues were really raised and discussed. We looked for compromises together, different ways of drafting things, and nothing in that process was sudden. Everything was done with forethought.

Senator Grimard: I note with satisfaction that our friends from the House of Commons were privileged in that they had the opportunity of studying the bill from the month of October until mid-December. Here, unfortunately, as you know, we can't say we had the same privilege since we inherited it last Monday and we are being asked to deliver it painlessly today. The time frames involved are not the same. I know you are not responsible for that.

I will move on to my second question, which is the following: over the past week, and that is all the time we had at our disposal, we heard about 40 witnesses, most of whom stated that before clause-by-clause study in the other place, there was a certain balance between the rights of creators on the one hand, and those of users on the other.

The criticism we heard here, which was not unanimous, of course, but which came from several witnesses, was that this balance was upset by the introduction of the 76 amendments. I would like to hear comments from you or the persons accompanying you on this.

Mr. Rabinovitch: Of course this concerns a broad policy issue and the question should really be put to the minister when she arrives. As public servants, once again, we looked for compromises when necessary and, of course, we made recommendations.

[English]

None of us felt that our recommendations in some way impede a fair balance. As experts on the matter, we believe that we have been able to make recommendations which continue to improve upon the balance found in the bill. Overall, it is more a question for a minister.

Ms Susan Katz, Director General, Cultural Industries Policy, Canadian Heritage: If I am not mistaken, the discussion was in regard to the exceptions provisions for public institutions. The bill as amended by the committee differed in some respects from the bill as it was tabled in the house in April.

Within the exceptions provisions, some exceptions became narrower in scope because the language was made somewhat more precise. At the same time, new exceptions were introduced and other exceptions were broadened in scope. There were indeed amendments to the exceptions provisions, but I believe that, overall, the balance continued to be maintained.

[Translation]

Senator Grimard: Thank you. I would have one last question for you. Did you, Mr. Rabinovitch, or other government officials, participate in the meetings that took place in March concerning used textbooks?

We know that that amendment was made shortly before midnight, at five to twelve. I am told that the parties concerned had been brought together. Very few of the people we questioned told us that they were satisfied with that meeting. Few people said that there was a consensus, although public servants from your department had told us previously that there was an agreement on that topic.

I would like to know whether you participated in the meeting, you or anyone else, and whether at any time there was a consensus on the matter at any time, because university and student representatives said to us: We still have a sword of Damocles hanging over our heads because we don't know whether the government will one day fully apply the clause that prohibits exporting used textbooks. What would your comments be on that?

[English]

Ms Katz: The issue concerning used textbooks was brought before the committee. It was clear that, within the market for used textbooks in the post-secondary market, there were different explanations as to exactly how that market functions.

Some data would suggest Canada is a net exporter of used textbooks. In other words, we create a greater supply of used textbooks in Canada than we consume.

The university textbook publishers had commissioned data over five years ago which suggested that the used textbook market was not a significant factor in the market for post-secondary textbooks. That study was based on data from 1992.

At the same time, university textbook publishers, based on their individual experience with course adoptions, found that the market for their new titles was, to some extent, being undermined by sales of used textbooks.

This is an indication of the different data and information we received on the used-textbook market.

The public policy interest in this issue is whether or not imports of used textbooks could increase to such an extent that they would jeopardize the ability of university textbook publishers to invest in, and produce, new Canadian textbooks for the post-secondary market.

After hearing this evidence and being uncertain as to how the used-textbook market is evolving, the committee came to the conclusion it would be prudent to give the government a safeguard measure. There should be an ability to act if imports of used textbooks grew to such an extent that the capability of publishers to invest in Canadian titles came into question. That is the provision we see in the bill now.

The government's intention is that it would not make any move to draft regulations for used textbooks until such time as the evidence was clearly on the table for all to see. The first order of business for us is to undertake some comprehensive research on this question. Once we have that research, we will be in a better position to know whether there is a public policy issue. At that moment, we can sit down and consult with all the stakeholders. We have made commitments to all the stakeholders, publishers, distributors, booksellers, wholesalers, and students, that we will work on this issue together in a transparent way.

Senator Roberge: Many groups which appeared before us were concerned about clause 44 dealing with section 66.91. It reads:

The Governor in Council may make regulations issuing policy directions to the Board and establishing general criteria to be applied by the Board or to which the Board must have regard... in establishing royalties... in rendering decisions in any matter within its jurisdiction.

I am quite concerned about that. These are unprecedented powers which the cabinet is taking upon itself, which can fundamentally change the character of the Copyright Board from a quasi-judicial body to a political, regulatory agency. Would you care to comment on that?

[Translation]

M. Rabinovich: I would ask Mr. Bouchard to give you an overview.

Mr. Bouchard: In fact, that clause was amended by the standing committee of the House of Commons to narrow its scope. A certain number of groups appeared before the committee to point out that this caused a problem. They were afraid that the government would intervene in the daily management decisions of the Board or in board decisions by issuing guidelines.

That is the type of argument that was presented to the standing parliamentary committee. The clause was amended in order to narrow its scope. The other point I would like to mention --

Senator Roberge: To narrow its scope in what way?

Mr. Bouchard: This involves technical, and especially legal, terms. I will ask my colleague from the Department of Justice, Mr. Richstone, to reply.

Mr. Richstone, Senior Legal Advisor, Department of Canadian Heritage: I don't have the exact text of the bill as it was tabled at first reading. The word was "directive". We had settled on "policy directions" rather than "directives" which is very constraining. "Policy directions" has a different connotation and refers only to the policy level.

Secondly, a change was proposed in paragraph a), as the Copyright Board had pointed out that the scope of paragraph a) was such at first reading of the bill that it gave the impression that the government was going to set the level of the royalties, whereas the Board was mandated to establish fair and equitable royalties. A change was made to paragraph a) as proposed by the Copyright Board. There were two important amendments to that clause made pursuant to comments by the parties concerned.

Senator Roberge: My information is not accurate. It says "in establishing royalties to be paid".

Mr. Richstone: That was the first wording. The Copyright Board pointed out that the words "in establishing" gave the impression that the Governor in Council would establish the royalties, whereas it was the mandate of the Board to do that. There was a change along those lines to preserve the role and mandate of the Board. That paragraph was amended in accordance with the suggestion of the Board.

Ms Danielle Bouvet, Director, Department of Industry: If I might add to the replies of my two colleagues, if we look at the history of those provisions, when copyright matters were negotiated in the free trade agreement, we had to introduce a rebroadcasting regime in Canada. The government at the time had thought it was a good idea to give the Governor in Council the power to review the decisions of the Copyright Board in the area of rebroadcasting. When we had another look at that provision in the context of Phase II, it seemed opportune to consider reviewing all of the rights conferred in the Copyright Act and we decided to put in place a more transparent process. It is a process that is to be established through regulation. Regulations will be pre-published in the Canada Gazette and there will be a period of consultation for interested parties, to give them the opportunity of expressing their views about the regulations the Governor in Council may introduce.

We felt it more appropriate that this power be over all rights, contrary to the one currently in the Act concerning rebroadcasting. The Governor in Council has a more transparent power because he will have to act through regulation, as opposed to the current provision where one has only to ask that the Governor in Council make a decision, without any consultation.

I thought it important to explain the difference between the two provisions.

Senator Roberge: When will the regulations be ready?

Ms Bouvet: In fact, this is an enabling provision, that is to say that the Governor in Council may make regulations if he feels it necessary. It is not at all certain that the Governor in Council will introduce regulations pursuant to that power, and if he decided to do so it would be in light of representations made by various parties in the coming years. The Governor in Council is under no obligation to make regulations pursuant to the current provision.

Senator Roberge: But when will the general regulations be ready?

Ms Bouvet: Under Bill C-32, many regulatory powers are granted the Governor in Council. Now there are only, three or four regulations that are mandatory, that must absolutely be put in place for the law to operate properly; as for the others, they are powers that have been granted to the Governor in Council and which will be exercised in light of practical experience in applying the bill.

Senator Roberge: And the three or four you are talking about, are they public now?

Ms Bouvet: No. In fact, none of the regulations are public at this time, because we were waiting for the adoption of the bill before going forward with the regulations. But we already know, pursuant to the enabling provisions we have, that some are mandatory, so that the Governor in Council will have to act now, whereas others are optional. It will be up to the Governor in Council to act if events or the situation warrant it.

Senator Roberge: Will the stakeholders who consulted with you receive copies of those draft regulations?

Ms Bouvet: Certainly. All of the regulations that are to be adopted by the Governor in Council must be preceded by a consultation process, which is already well known. They must first of all be published in the Canada Gazette, and there must be a 60-day period of public consultation. After those consultations, the regulation is published again in the Canada Gazette so that all interested parties may be heard and consulted.

Senator Roberge: The broadcasters want us to take the competitive situation of radio stations into account by establishing a grid. Will that request be taken into account?

Ms Bouvet: We are very well aware of that request made by broadcasters. We told broadcasters very clearly that as soon as the law comes into effect we will take steps to ensure that consultations are held or that work is done with the broadcasters or any other interested party to consider such questions.

Mr. Bouchard: I would add the following fact. In establishing tariffs presently, we must take into account the competitive capacity of broadcasters. There is nothing in the law that prevents the Board as such from taking it into account now, that is to say the capacity to pay, or factors of that kind, when it makes the decision concerning tariffs, either involving copyright or other tariffs.

Senator Roberge: English-speaking writers are against the bill because it contains too many exemptions. Quebec writers accept it and have asked us to pass it as quickly as possible. How can you explain the difference of opinion between these two groups of writers?

Mr. Bouchard: We did hear a certain number of groups, in fact, this week, representatives of English-speaking authors who did not support the bill, and we heard the Union des écrivains du Québec, that did support it.

I believe that UNEC in its testimony indicated that it did not think the bill was perfect. However, in light of the context and of Phase III that is still to come it considered that the bill had struck a balance and that they could live with what was in the legislation.

On the anglophone side, I believe the two associations that presented their perspective at the beginning of the week, PWAC and the Writers' Union, indicated that they were not in favour of Bill C-32, which can in my opinion be interpreted in a different way. What I mean is that we may have reached a balance between the users and the rights owners. However, there was another group representing creators, a collective society, who, though it did not indicate that it supported the bill fully -- I am referring here to CANCOPY -- the CANCOPY representative indicated that according to him, if I am not mistaken, a new balance had been struck in the bill and that balance was viable.

Mr. Rabinovitch: Madam Chair, we think that everyone has had the opportunity to be heard. The topic has been discussed for a long time. There are among us public servants who have worked on this bill or on draft bills for a number of years. We hope that the path Parliament chooses will allow us to say that we have contributed to a good bill, and not only to a bill --

[English]

-- but an actual adopted law. We look forward to the day that we can begin to work on phase three.

[Translation]

The Chair: I want to thank you very much for your presence and for the comments you have made today, as well as for the interest you raised.

Senator Roberge: I would like to go back to one question, because I have just seen the text which states that:

The Governor in Council may make regulations issuing policy directions... or to which the Board must have regard:

a) in establishing fair and equitable royalties to be paid pursuant to this Act;

It does instruct that they are to establish:

...fair and equitable royalties pursuant to this Act;

Ms Bouvet: This is a very commendable principle, in my opinion. I would like to draw your attention to the fact that the Board is asked to have regard for certain criteria. To us, to have regard means that the Copyright Board will have to hear evidence, to consider elements it may be asked to consider. However, the Board is not asked to let those criteria direct its decisions, or to make a decision which would have the effect of increasing or reducing royalties. It says that in light of certain criteria the Board will have to consider certain elements. Now, when it has taken those criteria into account, it is free to grant them whatever weight it sees fit; and consequently, it is free to make a decision as it sees fit, while having regard for those criteria.

What it is being asked to do is to have regard for certain criteria. It is extremely important to insist on that wording. It is not being asked to make a decision that will necessarily be different because of those criteria; it is told to take them into account.

Senator Roberge: Your explanation is very clear, however, I hope that the legal wording means the same thing.

Ms Bouvet: In fact, there are already precedents involving certain other provisions in the current Act. The Copyright Board has already had to take certain other criteria into account, particularly in the area of rebroadcasting. I think that the Board did that work very well.

The Chair: Thank you very much. We shall return at three o'clock.

The Chair: We are beginning an important session, since we have with use the Minister of Canadian Heritage.

[English]

Minister, we are pleased to welcome you to our committee again. Do you have a statement you wish to make before answering questions?

The Honourable Sheila Copps, P.C., M.P., Minister of Canadian Heritage: I thank you for once again giving me the opportunity to come before you to speak about Bill C-32. I think it is a very important matter. It is clear that you have pursued this matter with seriousness and diligence.

[Translation]

I appreciate the many hours you dedicated to examining this bill, and the great care you have in advance of the hearings to familiarize yourself perfectly with the limitless nuances of Bill C-32. I first of all want to congratulate all of the members of the committee, the Chair as well as the other men and women who have done this work.

I have followed your hearings closely and with interest, and I know how fairly you have tried to balance the competing interests.

You understand just how sensitive and important this legislation is for Canada's cultural community.

I trust, and I hope that you agree with me that the legislation presented to you by the government is the best possible legislation we could have drafted in this context.

[English]

I remain convinced now more than ever that this bill will directly improve the well-being of thousands of Canadian artists and bring Canada into line with the world community in protecting the property of creators and promoting their rights. For a decade now, many people have been moving in different directions on copyright. With this legislation, we are taking a giant step forward together.

This coming Wednesday, by coincidence, has been declared by UNESCO as World Book and Copyright Day, and I am hopeful that we will be able to celebrate Wednesday in Canada with our heads held high.

With Bill C-32 you have no doubt encountered the same strongly expressed views which we heard in the House of Commons. You also understand the many interests at stake here which both the Commons committee and the Senate committee had to take into consideration in elaborating a bill which reflects a proper balance.

[Translation]

We had four possible options, in the face of such division: do nothing; come forward with a bill that only focusers on protecting and enhancing creators' rights, which we did not do, or we could table legislation that would only address users' concerns; or find a forward looking balance between the rights of creators and the needs of users.

The objective was to come up with good, workable public policy, and that meant that compromises, as you all know, were needed. It goes without saying, thus, that all stakeholders could not get 100 per cent of what they wanted.

[English]

I respect those who have expressed concerns about the bill, but I believe senators have also discovered an impressive group of Canadians who understand that, if parliamentarians can find balance, we will make progress. As one witness before your committee said, "The bill could always be improved in my favour." It is time, however, to break the log-jam.

This process, spanning a decade, has been an extraordinarily open and democratic one. We owe it to our artists and creators, and we also have international obligations to honour.

I recognize the challenges posed by the information highway, multimedia, the Internet, and globalization. Bill C-32 is not the end of copyright reform. Should honourable senators have suggestions or ideas for the next phase of copyright, I personally, will be delighted to hear them. I make the same offer to all others who have strong views on copyright.

[Translation]

I would like to talk for just a moment about the future review of Bill C-32. I have listened to concerns from some honourable senators and I want to make a formal undertaking on behalf of the government, in writing, that the review of this legislation will be laid before both Houses of Parliament within three years of Royal Assent. I trust that my word on this matter will meet the legitimate concerns expressed by some honourable senators.

[English]

The process of copyright reform has been undertaken with a collaborative, non-partisan approach for the last ten years, since the day when the Honourable Flora MacDonald first began the process of copyright reform. I thank the honourable senators for approaching this legislation in the same spirit.

I have a letter I wish to table with the chair. It is an undertaking that we, the government, will review this process within three years. The chair has a copy of the letter. I will pass it to the members now.

The Chair: Yes, we have it. Thank you.

[Translation]

Senator Grimard: Madam Minister, thank you for visiting with us again.

Ms Copps: I am available.

Senator Grimard: The letter you tabled was the subject of several comments by witnesses. Senator Roberge and myself asked them on several occasions whether they were in favour of a review taking place sooner than in the five years mentioned in clause 92.

The three-year period you have chosen seems better to me first of all because it will allow you to see how the law is being applied. There are also clauses in Bill C-32 that will only come into effect in three years, for instance I am thinking of what broadcasters will be paying.

This measure you have introduced, which in fact corresponds to a request we had made, improves the bill in that all of the stakeholders are interested in moving immediately to Phase III. The fact that you have shortened the time frame makes the realization of their wishes possible.

That being said, I would have one gentle reproach for you which is that we would here too have liked to have had the possibility of studying this very controversial bill for as long a period as did the committee in the other place. We know through the Deputy Minister that the House of Commons committee began to study the bill in October and continued until mid-December, while we only received the bill last Monday. We have been studying it for barely a week.

Of course, it is true that senators are very knowledgable. It is true that senators have the right to examine legislation, but this is a very cursory examination, over in the blink of an eye, because the legislation has been before us for so brief a time.

I would like to ask you a question related to an article published by the Financial Post this morning. Obviously, when Bill C-32 was tabled, it had your support and that of the Minister of Industry and Commerce. Everything indicates that you piloted the bill, and it was you in fact who appeared before our committee last week.

Are we to understand that you have taken over the file and the Minister of Industry had distanced himself from it, or is it just that the opinion of a woman has twice the weight of a man's opinion?

Ms Copps: No, only in the words of Charlotte Whitton is that the case. No, I don't want to repeat them. The policy we are putting forward is a policy which emanates from both ministers, and it is the policy of the government. Of course, we had to go through cabinet for all of the changes that followed the recommendations of the House of Commons committee. Everything was done with the agreement of both departments.

Senator Grimard: We felt, Madam Minister, that there was some concern about collective societies. We know that these collective societies or management societies existed before, especially among broadcasters. However, now they have been imposed on universities, colleges, libraries and archives. We heard several witnesses express a great deal of apprehension with regard to those collective societies. I would like to know what you think about that.

Ms Copps: Collectives societies have existed through universities since Phase I of the copyright review. I am referring to CANCOPY which is a collective of English language writers, and so the Minister of Education of Quebec already has a collective agreement with authors. Those rights have existed since the first phase.

The authors were not concerned about the new rights being granted, but did not want the existing rights in the first part of the copyright bill to be diminished. We must not backtrack insofar as rights granted in 1988 are concerned.

Senator Grimard: In closing, Madam Minister, may we hope that the Prime Minister of Canada will act as he did when the Senate passed Bill C-71 on tobacco, by deciding to soften some of the clauses in the Act? The tobacco bill was passed. We know what was said. The prime minister promised suddenly to amend the Act. Can those who are dissatisfied, and we know that the bill is not perfect, expect a similar decision from the prime minister?

Ms Copps: The Prime Minister supports what we are putting forward in Bill C-32. You have asked that the review take place earlier than five years from now as suggested, that is in three years, and I am sure he would be willing to examine that in Phase III of the copyright review. I don't want to get into the other debate here, because you are better informed, which does not mean that I accept the gist of your comments.

Senator Roberge: The majority of questions asked have been answered, specifically the last one that concerned me a great deal involving clause 44 and clause 66.91. When you came last week, you did not know the exact amount of the royalty on tapes, nor the details concerning payment or collection. Have you obtained more specific information since then?

Ms Copps: The royalties are to be established by the Copyright Board. I mentioned to the committee the possibility that they might be set between 25 and 37 cents, based on what is done throughout the world. We will not be deciding the level of the royalties, they will be established by the Copyright Board. They decide the amount of the royalties.

Senator Roberge: I asked a related question earlier to Mr. Rabinovitch and his colleagues. I simply wanted that answer.

Ms Copps: Normally, if one looks at what is done in other countries, the figure might range between 25 and 37 cents per tape.

Senator Roberge: Thank you, Madam Chair. I have no further questions.

The Chair: Did you want to add something, Madam Minister?

Ms Copps: I want to thank you for the work you have done. I know it is not easy, nor has it been easy for us.

The Chair: We won't keep you any longer. Thank you very much for the letter.

You have all received the letter. You have it before you. Does that suit you? We have now heard our witnesses, we heard the officials and we have heard the Minister on a couple of occasions.

We have now reached clause-by-clause study of the bill.

Senator Pépin: Madam Chair, this bill is very important and has been the subject of discussions over several months, although it is true that it is not perfect. However, it will correct an unfair situation for our Canadian artists. Could we not vote on the bill as a whole, unless there are amendments?

The Chair: The Senators will decide. A motion has been made to vote on the bill as a whole.

Senator Roberge: It is with pleasure that we accept the proposal made by Senator Pépin.

Senator Grimard: Following the tabling of the letter, I think it would be a good idea to explain to members of the committee who are not aware of this fact that this is not a precedent, we have already seen something similar.

The Chair: It was kind of you to inform me of that. It will be in the minutes of the meeting. Mrs. McDougall had done the same thing when a particular bill was passed; she had committed herself in writing to a review of the law, just as Minister Copps has committed herself to a review within a three-year period. So, it is not a precedent. This was done before under other governments.

Senator Grimard: This is to please my friends across the way. The letter is dated July 20, 1988. She was subsequently reelected.

The Chair: We shall have to make comments and recommendations. We listened to the various witnesses who appeared before the committee with a great deal of attention.

You know, as I do, that after having discussed things with all of the senators on the committee, certain concerns remain about some clauses of the bill and with regard to the application of some clauses. I think that the committee must table recommendations and comments reflecting our concerns with its report. We will do that at the same time as we report the bill. I am waiting for some copies to distribute them.

We shall take a five-minute break. As soon as we have the copies, we shall read the comments and recommendations. If anything needs to be added, you must tell us. I think this faithfully reflects the concerns of senators and of some witnesses and stakeholders who came before us. People must not think that we did not listen to them. We were told on several occasions that the bill should be passed, that it was an important step to launch Phase III of the copyright review. We don't want to delay Phase III. We would like to be reassured about some of the clauses in the bill through the work of the department.

Senator Roberge: We hope we will be convened a bit earlier the next time.

The Chair: All of the senators on both sides of this table share that wish and would like to have more time to analyze bills. Nevertheless, we have done good work. I want to thank senators for the excellent work you have done in studying this bill, and I also want to thank the staff of the committee for their terrific work and the great support they provided us with, as well as the researchers who stimulated us in our review of this bill. I also want to thank the interpreters, the stenographers and the witnesses who came before us. After having worked on this bill for so long, so many months and years, in some cases, they have to be thanked for coming back here again to share their views; I think they did extraordinary work and I want to thank them also.

You have before you in both official languages the report of the committee. I will read it and you can make your comments, if you wish, at the end. It is a bit long, but I think we have to read it nevertheless. We have some time, the minister did not stay long. We will take the time we need.

[English]

Your committee to which was referred Bill C-32, an Act to amend the Copyright Act, has, in obedience to the Order of Reference of Thursday, April 10, 1997, examined the said bill and now reports the same without amendment but with the following observations and recommendations:

Bill C-32 is a comprehensive piece of legislation which touches upon many important sectors of the copyright economy. The bill constitutes the second phase of copyright revisions to Canada's Copyright Act, proclaimed in force in 1924. The first phase was completed in 1988 with the adoption of Bill C-60.

By its nature, copyright legislation seeks to strike a balance between the legitimate, but often conflicting, needs of users and the rights of creators of literary, musical and other creative works. It involves complex and technical policy issues, and solutions are not simple.

Your committee recognizes that some measures contained in the bill do not go as far as some of the interested parties might wish; conversely, some measures go too far, in the view of others. Given the divergent views of creators and users, your committee believes that a compromise totally satisfactory to all parties would be impossible to achieve.

In the course of its hearings on Bill C-32, your committee received submissions and heard testimony from a broad cross-section of creators and users. While several witnesses endorsed the bill and recommended it be adopted in its current form, a number of groups and individuals who appeared before this committee expressed concern about particular aspects of the proposed legislation, and recommended that it be amended.

Bill C-32 is a detailed piece of legislation. I will highlight some of the salient aspects.

Through the enactment of "neighbouring rights", the bill will entitle producers and performers of recorded music to royalties when their music is played in public. It will create an exemption allowing libraries to provide a copy of an article to library patrons. It will introduce a levy on blank audio tapes to compensate the music industry for the unlawful copying of its recordings. It will allow broadcasters to include incidentally protected materials in their programs without running the risk of infringement. It will protect exclusive book distributors in Canada by placing restrictions on "parallel" book imports. It will enable special format materials to be produced for persons with perceptual disabilities. It will provide copyright owners with improved remedies, notably, statutory damages and wide injunctions. It will enable educational institutions to tape broadcast programming, enabling them to take advantage of that "teachable moment". It will prescribe a fixed term of protection for unpublished works and create an exemption allowing the reproduction of archival material for research purposes.

On most of these issues, views expressed before your committee were conflicting, dividing user and creator interests.

Your committee is fully aware that the law of copyright is complex. Bill C-32 does not assist in making copyright law more accessible to those who are affected by it in their everyday activities. We note that the words "perceptual disability", "country" and "sculpture" are defined in this bill, whereas "remaindered books" and "performers" are not. Moreover, what is prohibited or permitted by Canadian copyright law is not readily ascertainable.

Your committee notes that provisions in the bill restricting the "parallel importation" of books will apply to used textbooks. Some parties argued that this provision could adversely affect university students seeking to purchase used books at discounted prices. Although used textbooks are not exempt from the parallel import restrictions by virtue of clause 45(1)(e), the government has undertaken to exempt them from the regime by passing regulations under subclause 27.1(6). Your committee recommends that used textbooks not be subject to the import restrictions unless there is compelling evidence that their sale in Canada is adversely affecting exclusive Canadian distributors and that there is an overriding public interest in restricting the importation of such books.

Your committee notes that the levy on blank audio tapes, to be imposed to compensate the rights holders of recorded music for unauthorized copying of their recordings, will apply exclusively to blank audio tapes and not to other recording media such as video cassettes. The precise amount of the levy will be fixed by the Copyright Board after consultations with interested parties. Your committee notes that the levy will be imposed at the manufacturing level, and consequently all sales taxes will be paid on the amount of the levy.

Manufacturers of blank audio tapes strongly opposed the levy, and predicted that the impact of the levy would be to create a "grey market" in Canada for blank audio tapes. Your committee therefore recommends that the government monitor market behaviour in Canada to assess the impact of the levy on sales of blank audio tapes, and to determine whether a similar levy should also be applied to other recording media.

Bill C-32 will enact "neighbouring rights," which will require broadcasters to pay royalties to recording artists and record producers. The neighbouring rights regime was generally opposed by broadcasters. However, broadcasters will pay only a flat fee of $100 on the first $1.25 million of advertising revenues. This preferential rate will cover about 65 per cent of Canadian radio stations.Royalties, as fixed by the Copyright Board and to be phased in over three years, will be paid on any advertising revenues above $1.25 million.

As the United States does not recognize "neighbouring rights", Canadian broadcasters will not be obliged to make payments in relation to sound recordings made in the U.S. However, the U.S. will enforce "neighbouring rights" related to digital radio offered to consumers on a subscription basis. Your committee therefore recommends that the government immediately undertake an in-depth study of the new digital technologies, in particular the Internet, and the impact their widespread commercial deployment might have on the payments Canadian broadcasters may be obligated to make to both Canadian and foreign rights holders.

Canadian broadcasters strongly opposed the "ephemeral recording" and "transfer of formats" exemptions set out in the bill. These exemptions would essentially allow broadcasters to make recordings and keep them for up to 30 days, although the exemption would no longer apply if a collective exists to grant a recording license. Your committee notes, while broadcasters are strongly opposed to these provisions which they find overly restrictive, they will nonetheless have 30 days within which to seek authorization if they wish to retain a recording for a longer period of time.

Finally, while your committee agrees that re-recording music every 30 days could be time-consuming and cumbersome for broadcasters, we estimate that licensing fees should be quite modest, should licences become available.

Your committee notes that the definition of "commercially available" was the subject of some controversy among interested parties. Originally, the term "commercially available" signified that educational institutions and libraries could make a copy of a work under selected exemptions if a copy could not be obtained in the market. A new definition was inserted into the bill, however, according to which "commercially available" signified the period of time any work is available through a collective license. User groups argued before your committee that the definition as altered was much too broad and open-ended, and that the original definition should be restored.

Your committee notes that, while educational institutions and libraries originally would have been exempt from liability for infringements carried out by means of self-serve copiers installed on their premises, the bill was changed so that these institutions would be absolved from liability only if they obtained a licence. The affected user institutions vigorously opposed the amended version. Creators strongly objected to the original measure, which they argued went too far in expropriating their rights. Your committee notes that, as collectives already exist to issue reprographic licences, the requisite licenses will be readily obtainable by educational institutions and libraries.

Your committee notes that, according to the original section 29.6 of the bill, educational institutions would have been allowed to record news programs and news commentary programs and to play them on the institution's premises for up to one year. This exemption was modified expressly to exempt documentaries. Your committee notes, while this change was made to clarify the scope of the exemption, which was never intended to apply to documentaries in the first place, interested parties will not have to incur expenses for litigation on this matter. Your committee further notes that it will still be possible to tape documentaries for educational purposes, although such recordings will be subject to a different regime for taping other programs set out under clause 29.7.

Some parties expressed concern that, under clause 38.1 of the bill, it will be possible to obtain statutory damages even against innocent infringers. However, in cases of innocent infringement, the court will have the discretion to lower the amount of statutory damages to $200 from the otherwise applicable range of $500 to $20,000. Thus, the bill makes allowances for innocent infringements without, however, total exculpation of the defendant.

Your committee notes that educational institutions and libraries will be exempt from statutory damages only if they are licensed. Your committee notes that while exemptions from statutory damages originally applied only to educational institutions, the bill was amended to include libraries, archives and museums. The exemption was thus broadened in favour of institutional users, at the expense of creators.

A number of the concerns raised before your committee related to the amount of royalties that would have to be paid if Bill C-32 was enacted. This was a particularly contentious issue in regard to the proposed levy on blank audio tapes to compensate music authors, performing artists, and record producers, for the unauthorized copying of their recordings. Your committee wishes to point out that the amount of this levy is not fixed under the bill. Rather, it will be determined by the Copyright Board following consultations with all interested parties. Whether a given royalty will be subject to the board's mandatory pre-approval, as will be the case in relation to the proposed levy on blank audio tapes and the neighbouring rights royalties, or whether the parties will themselves be able to determine the amount of royalties to be paid on the basis of a voluntary agreement, as will be the case in relation to making multiple copies of special-format works for persons with perceptual disabilities, interested parties will have the opportunity to take an active part in the process and bring all of the relevant facts to bear on the issue.

Your committee notes that Bill C-32 is the result of nearly ten years of negotiation and consultation. It is, moreover, the second phase of an ongoing review process. Phase III deals with copyright issues related to the information highway. Given the current context of rapid technological change in communications, especially the rapid growth of digital delivery systems and the Internet, Bill C-32 may prove inadequate to deal with copyright issues in the very near future. Your committee believes, in order to avoid possibly protracted and costly litigation, it will be necessary to undertake Phase III reforms in a timely fashion so that legislative reform can keep pace with rapidly-evolving developments in society.

Your committee notes that the bill calls for a review of the implementation of the act within five years of its coming into force. Given the divergent views expressed in relation to some of the bill's provisions, your committee recommends that the review be completed within three years of the act's coming into force in order to monitor developments under the revised legislation and to assess progress in the Phase III revisions.

In a letter tabled with the Committee by the Honourable Sheila Copps, P.C., M.P., Minister of Canadian Heritage, the Minister made the following commitment:

I undertake, therefore, that within three years after the coming into force of section 92(1), I shall cause to be laid before both Houses of Parliament a report on the provisions and operation of this Act, including any recommendations for amendments to this Act. This will allow sufficient time to assess the impact of the renewed Act and to bring about any changes that may be required in the new communications environment.

We will have the French translation as soon as possible, and we will submit this with the report at the next session, which is tonight. Are there any comments? If not, Bill C-32 is now adopted, and we will report it in the chamber tonight.

[Translation]

Senator Grimard: I would like to thank you, Madam Chair, on behalf of my colleagues, for your patience and for the way in which you guided our debates.

The committee adjourned.