Skip to Content
 

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

Issue 23 - June 22, 2012 (morning meeting)


OTTAWA, Friday, June 22, 2012

The Standing Senate Committee on Banking, Trade and Commerce, to which was referred Bill C-11, An Act to amend the Copyright Act, met this day at 8 a.m. to give consideration to the bill.

Senator Irving Gerstein (Chair) in the chair.

[English]

The Chair: Yesterday afternoon, the Senate referred Bill C-11, An Act to amend the Copyright Act, to this committee for its examination. We began our consideration shortly thereafter, hearing from the Minister of Industry, the Honourable Christian Paradis; and the Minister of Canadian Heritage, the Honourable James Moore.

Today, we will continue that examination, hearing from a number of interested stakeholders and experts in the field. In this first session, we are pleased to welcome Professor Michael Geist, Canada Research Chair in Internet and E-commerce Law at the University of Ottawa. Colleagues, we have one hour for this session. We also welcome Mr. Jay Kerr-Wilson, who is appearing on behalf of the Business Coalition for Balanced Copyright.

Professor Geist, we will hear from you first, followed by Mr. Kerr-Wilson. The floor is yours, sir.

Michael Geist, Canada Research Chair in Internet and E-commerce Law, University of Ottawa, as an individual: Good morning. My name is Michael Geist. As you heard, I am a law professor at the University of Ottawa, where I hold the Canada Research Chair in Internet and E-commerce Law. I am also a syndicated weekly columnist on law and technology issues for the Toronto Star and the Ottawa Citizen. I edited From "Radical Extremism" to "Balanced Copyright": Canadian Copyright and the Digital Agenda, which was the largest academic study on Bill C-11, with peer-reviewed contributions from 20 leading experts across the country.

I appear before this committee today in a personal capacity, representing my own views. As when I appeared before the House of Commons Legislative Committee on Bill C-32, in December of 2010, I wish to emphasize that I am supportive of much of what is now Bill C-11. There are many positive elements in the bill that reflect a genuine attempt at striking a balance and developing forward-looking copyright laws. However, the bill also suffers from a very serious flaw that has been the source of considerable controversy and widespread opposition, the digital lock rules.

Let me start with several of the positive elements of the bill.

The fair dealing reforms, which add parody, satire and education to the list of fair dealing categories, represent an attempt to strike a balance between those seeking a full, flexible, fair dealing provision and those opposed to new exception categories altogether. I think the compromise is a good one. The government rightly rejected misleading claims that the changes will permit unlimited, uncompensated copying. It is fair dealing, not free dealing, and the new changes will still be subject to a six-factor test developed by the Supreme Court of Canada to ensure fairness.

The bill also adds several new consumer provisions, including time shifting, format shifting, backup copies and an exemption for user-generated content. Some of these exceptions are long overdue as they reflect common consumer practices.

Third, the bill also rightly distinguishes between commercial and non-commercial infringement for the purposes of statutory damages. Canada is in a small minority of countries that has any statutory damages at all. The prospect of multi-million-dollar liability for non-commercial infringement is frankly unconscionable, and this change will remove that risk.

The bill's approach to Internet providers is a fair one that provides rights holders with an effective tool to counter online infringement, respects the privacy and free speech rights of Canadians, and assigns an appropriate role to ISPs. It is a model that the Legislative Committee heard works well and that other countries, such as Chile, have begun to emulate.

While those are some of the positive elements, the digital lock rules remain a serious problem. I should clarify that much of the concern does not come from digital locks, per se. Companies are free to use them if they so choose. Moreover, there is general agreement that there should be some legal protection for digital locks since it is a requirement of the WIPO Internet treaties. Rather, the concern stems from Bill C-11's unbalanced position on digital locks, in which digital locks trump virtually all other rights. This distorts the copyright balance, not only for the existing exceptions in the Copyright Act but also for new consumer rights, which can be trumped by a digital lock at a time when locks are widely found on devices, DVDs, e-books and more. The most obvious solution would have been to amend the bill by clarifying that it is only a violation to circumvent a digital lock where the underlying purpose is to infringe copyright. This approach, which has been adopted by trading partners such as New Zealand, Switzerland and India — incidentally some of the same countries with which we are negotiating international agreements such as ACTA, CETA and the TPP — would have ensured that the law could be used to target clear cases of commercial piracy but that individual consumer and user rights are preserved.

The approach I just suggested, linking circumvention to copyright infringement, received wide support during the Bill C-32 and Bill C-11 hearings. Many business groups, creator groups, consumer groups, education groups and library groups supported this approach, as did tens of thousands of Canadians who wrote to their elected officials on the bill. The urgency for change stems from the genuine harm that the current approach may cause. Let me give you a few examples:

The House of Commons Industry Committee just recently heard from an intellectual property enforcement firm that expressed concern that the digital lock rules will actually harm efforts to enforce IP rights. Documentary filmmakers warned that the absence of an exception for DVDs will leave Canadian creators at a competitive disadvantage relative to U.S. filmmakers, who do have such an exception. Groups representing the visually impaired fear that the blind will not have full access to electronic materials since a digital lock exception for those with perceptual disabilities is ineffective.

Teachers and librarians worry that Canadians will lose their ability to use their fair dealing rights once a digital lock is installed.

Researchers have expressed concern that they may be blocked from conducting legitimate research and unable to apply for research grants to support their activities.

Constitutional scholars have warned of the constitutional risks of a digital lock approach that is fundamentally about regulating private property, which is, of course, a provincial matter, rather than protecting copyright. Finally, business experts have noted that the Canadian digital economy has succeeded without this very restrictive approach. The Business Software Alliance recently reported that Canada has shown the fastest decline in piracy rates in the world over the last five years. The IFPI, the global music association, reports that Canada is now the third leading paid music download country in the world, with Canadians buying more music downloads than either Germany or Japan, despite a much smaller population, and more than Austria, Belgium, Croatia, Finland, France, Greece, Ireland, the Netherlands, Portugal, Spain and Sweden combined.

Let me conclude by reiterating that there are many good provisions in Bill C-11 and that fixing the harms caused by the digital lock rules that extend far beyond international requirements could be done relatively easily. The decision to reject the amendments to address this concern and leave the digital lock rules intact effectively has the potential to lock out the blind, create disadvantageous barriers for creators and educators and stifle innovation. I think that is a cause for concern, not celebration.

That said, I recognize the urgency of getting the bill passed and the desire of many to not hold it up with further amendments. There is a solution to the digital lock problem that does not require any amendment to the bill, however. Proposed section 41.21(2) of the bill includes a regulation-making power to add exceptions to the digital lock rules. It is clear that the government recognized that there were legitimate concerns for over-broad, anti-competitive and anti-consumer effects that could arise.

Therefore, I recommend that the committee itself should recommend a new exception be created by regulation before the bill takes effect that permits circumvention for non-infringing purposes. This approach would ensure that the bill can pass quickly, be used to target clear cases of commercial infringement, support those businesses that want to use digital locks, and ensure that many affected groups will not be unduly harmed by the legislative reforms.

Jay Kerr-Wilson, Business Coalition for Balanced Copyright: Thank you very much, Mr. Chairman, members of the committee. My name is Jay Kerr-Wilson and I am here today on behalf of the members of the Business Coalition for Balanced Copyright. Thank you very much for giving the members of the business coalition the opportunity to present their views on Bill C-11.

The members of the BCBC include individual companies and trade associations representing a broad spectrum of the communications, technology, broadcasting, retail and Internet industries.

We think that in Bill C-11 the government has achieved a fair and reasonable balance and we support the passage of this legislation. It provides rights owners with important new tools but also embraces the idea of users' rights. The BCBC agrees with the consumer-friendly approach to copyright reform that the government has taken in Bill C-11.

In my remarks this morning, I would like to focus on the provisions of the legislation that deal with cloud computing and network personal video recorders, which give consumers the ability to store digital content in a secure and efficient manner for their own personal use.

When this legislation was first introduced in the House of Commons as Bill C-32, then Industry Minister Clement said that Canadians would be able to record television, radio and Internet programming to enjoy it at a later time, if the bill is passed, with no restrictions as to the device or medium they wish to use. Just as important, he said, this bill would remove any barriers in the Copyright Act to the introduction of new technologies like the network personal video recorder and cloud computing. This latter is critical to Canada's ability to participate in the digital world as a full partner.

The BCBC is concerned that the provision of Bill C-11 that is intended to facilitate cloud computing, network PVRs and remote storage is not as clear as Minister Clement's statement in reflecting the government's policy.

In order to remove copyright barriers to the introduction of network PVRs for the benefit of Canadian consumers, we need to deal with three distinct activities.

First, the consumer has to be able to make a copy of the television program. Second, the consumer has to be able to store the copy over the Internet or another network; and third, the consumer has to be able to retrieve the copy over the Internet or other network when they want to watch the program. The consumer's ability to make the copy is covered by the personal use exceptions, including the time-shifting exception that applies to television programs. Storing and retrieving the copy are intended to be covered by the new hosting exception.

The provision of Bill C-11 in question, clause 35, will amend the Copyright Act by including a new provision at section 31.1(4), intended to provide an exception for hosting services, including remote storage and network personal video recorders.

The provision currently reads as follows:

. . . a person who, for the purpose of allowing the telecommunication of a work or other subject-matter through the Internet or another digital network, provides digital memory in which another person stores the work or other subject-matter does not, by virtue of that act alone, infringe copyright in the work or other subject-matter.

The provision clearly and explicitly exempts the act of providing digital memory. That is the storage function. The BCBC's concern is that the transmission of the content back to the consumer is only implicitly covered in the provision. The lack of express reference to the transmission will create legal uncertainty that will put a chill on the investment in network PVR technology. This is contrary to the government's intention to make this service, which Americans currently enjoy, available to Canadians.

In fact, this very issue resulted in confusion when the provision was discussed by the members of the Legislative Committee during clause-by-clause review of Bill C-11. In particular, one exchange between a committee member and Industry officials led to a question as to whether the exception prevents business-to-business agreements to provide network PVRs. Such a question does not, however, make sense in the context of an exception to copyright.

If an activity is covered by an exception to copyright, that means consent is not required and there is no need for an agreement. That is the very essence of an exception. If agreements are required to launch network PVRs in Canada, then Canadians will not have access to the service, and it is Canadian consumers who will be the losers in such a scenario.

We do not believe that uncertainty and unnecessary litigation is the government's intention, however. The confusion that arose at the Legislative Committee could facilitate frivolous legal claims. Any possible confusion could be eliminated by simply amending clause 35 of Bill C-11 to refer explicitly to the ability of consumers to retrieve the content they had stored in digital lockers or on network PVRs. The provision would read as follows:

. . . a person who, for the purpose of allowing the telecommunication of a work or other subject-matter through the Internet or another digital network, provides digital memory in which another person stores the work or other subject matter does not, by virtue of that act alone and the transmission of the work or other subject matter to the person who stores it, infringe copyright in the work or other subject matter.

It would then be absolutely clear and unambiguous that the provision covers both the storage of the digital copy by the consumer and the transmission of the digital copy back to the consumer. With that simple addition, the provision would be as clear as Minister Clement's statement in the house. Consumers' ability to benefit from new and efficient technologies would be indisputable.

At the very least, this committee should invite department officials to appear and to clearly and unconditionally state that the hosting exception, as drafted, applies to both the storage of content by a consumer and the transmission of that content back to the consumer who stored it.

The second issue I would like to briefly address relates to the notice and notice obligations that Bill C-11 imposes on ISPs to respond to allegations of online copyright infringement. We support these provisions, and many Canadian ISPs have engaged in voluntary notice and notice system for nearly a decade. However, we are concerned that the bill does not provide any time for ISPs to implement the changes necessary to comply with additional obligations that will be imposed by the legislation, or for ISPs that do not have automated systems to develop and implement these systems.

We respectfully recommend that the notice obligations only come into force after a period sufficient to ensure that new or modified notice systems are fully operational and, once the minister has enacted regulations, prescribe both a simple and standardized form of the notice, and the cost-recovery-based fees that could be recovered for processing the notices. We believe a sufficient period for bringing the section and new regulations into force would be one year.

In closing, the BCBC wants to emphasize its support for Bill C-11. Our recommendations are simply intended to ensure that the language and implementation of the legislation is consistent with the government's stated intention.

Thank you for giving us time to present these comments, and I look forward to responding to any questions you might have.

[Translation]

The Honourable Céline Hervieux-Payette: Gentlemen, good morning and welcome. If I may, I will be speaking in French, although I followed your text in English. There might have been a translation problem at one point. I have a hard time writing in French at the end of the day.

I am actually speaking to Mr. Geist in particular. Mr. Geist, thank you for your contribution to the discussion on this piece of legislation as a whole. I am sure that you did not come up with it just like that. I am asking the same question as the question in your conclusion:

[English]

The decision to reject the amendments to address this concern and leave the digital lock rules intact effectively has the potential to lock out the blind, create disadvantageous barriers for creators and educators and stifle innovation.

[Translation]

Who is going to benefit from that? Why would the government not respond positively to your suggestion? I do not think that any government would want to exclude clients from using those tools. I noted that you have seen good things. However, when we look at the number of concerned groups, I see that you are not the only one to be concerned; there are a number of stakeholders, be they documentary filmmakers, blind people, librarians, professors, researchers, or constitutional lawyers. That is a lot of people.

Who would benefit if this measure is not adopted? The government is putting forward a measure that will improve things. That is why we are introducing a bill. Who would benefit if this change is not made?

[English]

Mr. Geist: That is a great question, one I have asked myself a lot as well. What is the government's motivation for some of these situations with respect to digital locks? We have seen much evidence over the last number of years that a lot of the approach has to do with pressure from the United States to adopt this approach. The provisions, particularly on digital locks, very closely mirror what we see in the United States, and in some instances much of it is just a matter of timing.

As an example, I do not think there is any reason the government would not have been willing to give an exception to the documentary filmmakers, particularly given that, in the United States, they have a specific exception that allows circumvention of DVDs where they are creating their films. It makes little sense to lock out our own creators as they need to access a clip. The problem in this instance, I think, was simply a matter of timing. Bill C-32 was first introduced in June of 2010. The U.S. exception for documentary films for DVDs came in July 2010, a month later. The fact that it came later made it difficult to reverse course.

In the case of the blind, I agree with you: Who would be against providing appropriate access for the blind? The problem there has to do with the exception itself. There is an exception in there for those with perceptual disabilities. The problem with the exception is it says that it is subject to the person who is circumventing the lock, who is getting around this limitation, not unduly impairing the TPM, not unduly impairing the digital lock.

If you have perceptual disability, are sight impaired, the whole point is to unduly impair the lock. That is how you ensure that you have access. We do have an exception in there; the problem is that for someone who is blind and needs access it is practically unworkable, because they face the potential for real liability if they seek to rely upon it.

[Translation]

Senator Hervieux-Payette: For the benefit of any Canadians listening to us this morning, since this meeting is broadcast, could you describe the lock-out technique, the locks? What does that mean in lay terms or in our terms since we are not necessarily well versed in telecommunications?

[English]

Mr. Geist: That is a good question. In a sense, copyright has three layers of protection. The first layer is the Copyright Act itself, which provides legal protection. If you write something down, you create something, you have copyright protection.

Technology can create a second layer of protection — locks that we find on DVDs that might restrict someone either from making a copy of the DVD or, even more, there is what is known as region coding on DVDs that actually limit the ability to play a DVD to particular DVD players. If you buy a DVD here at a local Ottawa store, it will play on your DVD player. If you buy a DVD in Europe, it is region coded to Europe and it will not play here. That is a digital lock that, in a sense, locks you out from accessing your own personal property.

Bill C-11 creates a third layer of protection. It says that attempts to circumvent or get around the digital lock, the region coding, for example, is itself an act of infringement. The problem there becomes immediately apparent. For example, if I purchased a DVD in Europe and I bring it back to Canada to play, we are now talking about my own personal property, and this law says my attempt to circumvent that lock simply to play that DVD is an act of infringement. That is why constitutional lawyers say this is primarily about personal property, not about copyright, because we are not talking about copying here; we are talking about mere access.

The solution was to say that where someone is circumventing that lock, trying to get around it because they want to infringe copyright by, for example, burning 1,000 copies of that DVD and selling them on the street corner, absolutely the law ought to apply. We need an exception, or at least a carve-out, for individuals seeking to access for their own use, for documentary filmmakers and other people who have a legitimate reason to access what is, in many instances, their own property.

As I mentioned, there is a solution to that which, at this stage, does not even require changing the bill. Because the government itself acknowledged that this could be a problem, it gave specific regulation-making power on the digital lock issue, and the committee could recommend that the government create specifically that kind of exception.

[Translation]

Senator Hervieux-Payette: I bought some DVDs and I cannot use them because I did not know that they would not work in Canada. I am neither a hacker nor someone who wants to break the law.

In terms of your proposal to have regulations, have you received a positive response from government authorities, allowing you to anticipate and, most importantly, to address various clients' concerns? The request has been accepted, so do they agree with you that it can be done?

[English]

Mr. Geist: I believe they do. There are a number of ways we can measure this. I heard Minister Paradis talk yesterday about the 8,000 consultations that were conducted to create the copyright bill. The overwhelming majority of people who spoke out on copyright spoke first and foremost to the digital lock issue and to the need to create this kind of approach, one that provides protection for businesses that want to use locks, but at the same time does not distort the balance and ensures that the same rights that this myriad of other groups have in the non-digital world continue in the digital world.

At committee, group after group on the education side, the consumer side, the library side, and indeed many business groups and creator groups, all said that they have concerns with the current approach to digital locks. They think that the right approach here is one that is consistent with the international treaties and with the WIPO Internet treaties. It is one that has been adopted by some of our trading partners with which we are actively negotiating on core trade agreements like the TPP and CETA. That approach would address all of these issues. It would address the concerns for the blind, for creators and for education. There is a fairly straightforward way to do it. It was raised at committee, but those amendments were rejected.

Senator Massicotte: Thank you for being with us this morning.

Before we get into the digital locks issue, most of the emails that we receive from people concerned with this bill deals with the educational factor. We hear from authors and many professors. They do not use the term "digital lock", but they seem to interpret the act differently than I would. Is there a real issue there or is it just a misunderstanding of what the proposed act really intends to do?

Mr. Geist: The issue around the change to fair dealing came up a lot in committee. As I mentioned in my opening remarks, I think it is a misunderstanding of the way that fair dealing functions. The way fair dealing functions in Canada is essentially a two-stage analysis. The first stage, if you want to argue that your use of a work is covered by fair dealing, is that first you have to qualify for one of the fair dealing categories. At the moment we have five: research, private study, news reporting, criticism and review. If you do not qualify for one of those categories, you are out immediately. You cannot make the argument for fair dealing.

If you do qualify for one of these categories, the Supreme Court of Canada has established a six-factor test to determine whether the use is fair. For example, the mere fact that someone says they did it for research purposes does not mean that it qualifies for fair dealing. One could not copy an entire movie or an entire book and say they did it because they were conducting research and they thought that was fair dealing, when there were other options available.

These new exceptions — parody, satire and most notably education — simply add another category. So the education category is now added, but the analysis remains the same. If someone seeks to rely on fair dealing for education purposes, they first have to say that it is covered by education. Private study, research, criticism and review already cover much of what takes place within education. It is not as if educators do not already rely on fair dealing. They do, and they do so actively because the existing categories cover much of this.

Where they do not, this will fill those gaps. I think it is evolutionary, not revolutionary.

Just qualifying for the category does not mean that it is fair dealing. You still have to then demonstrate through the six-factor test that the use itself or the dealing itself is fair. These claims that have been made that somehow now educators will be able to make unlimited amount of copying without compensation is completely at odds with the way the law functions and what the Supreme Court of Canada has had to say, and indeed the way both education institutions and the groups representing creators have been functioning.

Senator Massicotte: Thank you for the clarity. I appreciate it.

Let me go back to the digital locks. You made reference that we are the exception to many of our competing countries but, if I understand correctly, we are the same as the United States except they have an exception for documentaries. Am I correct in saying that?

Mr. Geist: We are very similar to the United States. There are other countries that adopt similar approaches to what we have done here. The closest comparison would be with the United States. In Europe, European countries have a range of different exceptions, some that you find in this bill and many others that you do not.

Senator Massicotte: How about France and England? Give me some specifics, sir.

Mr. Geist: I will give you some examples. In Europe, we have different countries like Sweden, which has an exception for court cases and legal documentation. At the moment, there is no exception for court cases in the law. What happens if someone takes these legal materials, places them under a digital lock and adds in headnotes and the like? If someone then wants to circumvent just to be able to access some of those legal materials, they are not able to do it.

We have seen other countries in Europe that have specific exceptions for teaching purposes. We have seen others that actually have it even to protect minors. The concern, for example, is what if someone circumvented a lock because they were concerned about their child accessing something, and the fear is that there I am just circumventing a lock, so will that land me on the wrong side of the law here? They have created a specific exception in that instance.

We have also had exceptions in other countries that try to make absolutely clear that it only applies to copyright materials. The experience in the United States in particular is that these rules have been used in cases that have seemingly nothing to do with copyright. Let me quickly give you an example, because it involves a Canadian company called Skylink. This Canadian company located in Burlington, Ontario, made a universal garage door opener remote. The idea was that if you had a two-car garage and remote garage openers from two different companies and the remote did not work, this had the ability for you to open up both garage doors with the same remote. It does not change the world, but it is useful for someone trying to open their garage doors. In this instance, what happens is that in order for that remote control to function, they effectively had to circumvent the lock, the technology that existed on the garage door opener equipment. What does have that have to do with copyright, you ask? I would ask the same thing, yet Chamberlain, a large garage door opener company, sued Skylink, this Canadian company, arguing that it was violating these digital lock rules because, in order for its device to work, it had to circumvent that digital lock. They ended up having to go through three levels of court cases, spending hundreds of thousands of dollars in order to defend themselves.

That is a real danger from a business perspective to see that kind of misuse, and it is precisely why we need to see a carve-out for what everybody would acknowledge is legitimate activity. The problem here is that by taking this very broad, inflexible approach, one that goes far beyond what is necessary under international law, you have the danger of scooping in within that any number of activities that are perfectly legitimate and legal.

Senator Massicotte: Mr. Kerr-Wilson, do you agree with the comments of Mr. Geist? Do you agree with those concerns?

Mr. Kerr-Wilson: Certainly the BCBC, during the copyright consultations, did raise concerns about application of the digital lock rules to non-infringing uses. It has not been our primary focus through the Bill C-11 consultations, but in principle we certainly agree that those are legitimate concerns that should be addressed at the regulation-making power.

Senator Tkachuk: Welcome. Part of the problem is that it is a new world, and I think people who make the law are just as confused as the people who are going to be using the product itself. Could you just help me understand? I am a consumer. I am buying product. You mentioned a DVD that does not play in Europe but can play here. Well, you know what? I have a whole bunch of LPs that for a while I was not able to play until the kids figured out that I could buy a phonograph player. If you bought a DVD here or a CD or downloaded a song from iTunes, what would be the problem? Are there any issues with consumers as far as the digital locks there are concerned?

Mr. Geist: Absolutely. Let us go with that DVD and not even talk about a DVD that you have purchased in Europe and came back to play here, because you cannot. Let us talk about the DVD that you just walked down the street here and purchased. If you are in my household, no one ever watches the movie off of that plastic disc. They want to rip the DVD and be able to play it on their iPad or computer, the device of their choice. In fact, there is an exception in the bill for format shifting. It recognizes that if we are to have some sort of forward-looking laws, this reflects common consumer practices. Few people buy CDs for the purposes of ever listening to the CD itself; they want to play it on their iPod. Increasingly few people even buy DVDS for the purpose of playing them in their DVD player. They want to be able to put it on the device of their choice and carry it around wherever they happen to go. In fact, if you look at the newest Apple computers, they do not even contain a slot for the DVD anymore. The recognition is that we are shifting to a world where you play the content on the device of your choice.

There is a format shifting provision in there, but it is subject again to a digital lock. It gives and then takes back immediately. On the one hand, it says okay, we will recognize that people do engage in what we are calling format shifting, taking the same content and moving it from one format to another, but it says if there is a digital lock, that format shifting exception does not apply anymore. On the one hand, we tell consumers "Yes, go ahead and do it," yet we know deep down that in the DVD market, the activity still is not legalized because there are digital locks found on that content and consumers cannot engage in that practice, at least in a legal way.

Senator Tkachuk: Will that not impede consumer demand? Will that not cause people who sell DVDs to say, "These people are not buying the DVDs because they cannot use them in different formats, so we will remove the digital lock for those provisions?" Is that not what will happen?

Mr. Geist: No. What will happen is what happens now. People will have complete disregard for a law that says that they cannot take their personal property and play it on the device of their choice. If we are hoping through this law to achieve a new level of respect for intellectual property and copyright, then we at least have to be consistent with what I think is viewed as not only common practice but ethical and appropriate practice as well.

Senator Tkachuk: To get around the lock, do you not have to buy software? Do you not have to find a way to get around the lock?

Mr. Geist: You do have to find a way to get around the lock, and for some that can be a challenge. That is why there are countries like New Zealand that have established systems with authorized circumventors, recognizing that there are legitimate reasons in some circumstances to circumvent that lock and they want to ensure people have the ability to do so. Practically speaking, for certainly a generation of Canadians, obtaining the software they need to be able to circumvent that lock is trivial, and they will engage in that activity. We can say the law tells you that you cannot do this, but we are saying at the same time that we have to breed a new level of respect for copyright in Canada. That is tough to achieve when you say, "That DVD you just purchased? You cannot go ahead and play it on your iPad or transfer it so you can play it on your iPad or other device."

Senator Tkachuk: First, I do not agree with you. I think people will just go somewhere else to buy their product. Everybody tries to protect what they make, and they have a right to protect it. If people figure out that they have to buy three DVDs rather than one, they will not buy them. They will find a company that will supply them with a legitimate DVD that they can play on all formats. If I go to iTunes, I get MP4s. Trying to get MP4s so I can download 50 songs and put them in my MP3 player in my car and never have to switch them, instead of plugging it in because I do not have the plug in, now I will go to another supplier that actually allows me to buy the song that I can play in an MP3 format or in any format I like. That is what consumers do because they do not want to have to go through the trouble of having to take that downloaded song and put it into an MP3 format. You have to buy software for it. It takes time. It is a pain. That is why people do not steal as many songs because it is so easy to buy them, and they are all good quality, whereas before you could get them for free. Your argument would be that they would still get them for free, but they do not. They pay for them.

Mr. Geist: I am not talking about getting something for free here. I agree with you that businesses have to enter into and compete in the marketplace. Canada is now a world leader when it comes to these services, without these digital lock rules, because we are seeing some competition. However, if we take a look at the evidence, these digital lock rules have been in place in the United States since the late 1990s, before the advent of Napster. The notion that there are people in the United States not taking their DVDs and playing them on their iPads does not reflect reality. Ten years ago, Apple had their campaign called "Rip, Mix, Burn." The whole idea is that they recognized that people were engaging in precisely these kinds of activities. Even if we accept that — and I agree with you that there will be a segment of consumers who either do not have the technical capability or would not do it and will seek other ways to get it — recognize that there will be other groups affected by this who do not have that other consumer option. If I am a documentary filmmaker, as an example, and I want to create a film that is critical of someone and use this clip, I do not have the option of going somewhere else to get the non-locked version of this. I have to actually go to this person. I could exercise my fair dealing rights and circumvent and use that clip, but now I cannot because there is a digital lock. I could go to the person and say, "I am making a critical film about what you are doing, do you give me permission or will you give this to me?"

Senator Tkachuk: Why would I?

Mr. Geist: That is the point.

Senator Tkachuk: Exactly.

Mr. Geist: From a free speech perspective, to ensure that people have the ability to exercise appropriate criticism and review and that filmmakers have the ability to go ahead and create, you have to ensure that their ability to use those clips is not dependent on your permission. In fact, the law says that it should not be.

Senator Tkachuk: Should I get money for you using a piece of my particular DVD?

Mr. Geist: Fair dealing would say that if it qualifies for fair dealing purposes, for criticism purposes, no compensation is needed. If I am using large amounts because I am effectively replacing that market and do not meet that six-factor test, then the answer is yes. It is context dependent. In a criticism context, where all I want is a short clip, you might not give me that permission because you do not want to face that sort of criticism, so I do not have the alternative to ask you for permission. The law has recognized that by creating those exceptions. The danger with the digital lock is that the person has the ability, essentially, to take away those exceptions simply by placing a digital lock on their content.

Senator Moore: Thank you, witnesses, for being here. Mr. Geist, I have just a couple of quick things. You mentioned the six-factor test. Are you referring to the Supreme Court of Canada decision of CCH Canadian Ltd. v. Law Society of Upper Canada?

Mr. Geist: Yes.

Senator Moore: The company that made the contraption that avoided the garage door, was it Skylink?

Mr. Geist: Yes.

Senator Moore: In the suit of Chamberlain, what was the outcome?

Mr. Geist: In the end Skylink won. They faced two rounds of action at the International Trade Commission in the U.S. and another round within U.S. courts. That is just one example of many where we have seen the application of these kinds of rules to stuff that seemingly has nothing to do with copyright. There is that potential for bleeding over.

Senator Moore: What was the ruling? What did it say?

Mr. Geist: The ruling was this was not properly copyright and that it should not apply. The problem with rules that apply as broadly as they do in the United States and here is that there is a legitimate concern that you can see aggressive litigation where you see these arguments. We saw another one in the United States that involved printer ink refill cartridges. The business model is not in the printer but in selling the ink itself. Lexmark, the printer cartridge company, sued another company that was selling refillable cartridges for their printer, arguing that they had to circumvent the lock in order for those cartridges to work.

Senator Moore: Senator Tkachuk and Senator Hervieux-Payette asked about the technology. You buy a DVD, and there is something embedded in that. Then you take it and put it in your computer or your player at home. There must be something in that piece of equipment as well to receive and respond to that thing that is embedded in the DVD.

Mr. Geist: Yes.

Senator Moore: Does every piece of playing equipment have something built into it by the manufacturer in anticipation of someone putting in a piece of entertainment that will have a lock in it?

Mr. Geist: Yes.

Senator Moore: They are all built with that? There are the two things, the thing embedded in the DVD plus the thing built into the playing unit.

Mr. Geist: Yes. When DVDs became a commercial product, they adopted a technology known as CSS, Content Scramble System. The idea was that, for any device manufacturer to be able to bring to market a device that could play DVDs that contained this CSS, they had to reach an agreement with a consortium established on behalf of the entertainment industry to allow the device to unscramble or allow the DVD to play. The problem with that is that you then end up with devices or computer operating systems that may not play DVDs themselves. In some ways and anti-competitive ways, you can shut out certain kinds of software from this world of DVD playing. A good example is open source software. Linux-based computers will not play these DVDs at all but for the use of these kinds of circumvention technologies. There has been a refusal to deal with what is an essentially open source. It is very difficult to deal with an open source that is more openly available. If, on my system, I run a Linux-based player, I cannot just pop in that DVD.

Senator Moore: You mentioned the exemption for disabled people and the example of a blind person. As I understand it, the exemption is there, but that person would have to obtain a tool that would enable him or her to take advantage of that exemption. However, the use of that tool itself is an illegal act.

Mr. Geist: That is a very important point. The possession of the tool by a consumer is not an act of infringement. The distribution of the software that can be used to circumvent is. You are right that, even with these exceptions, they are particularly illusory in some instances because, if you are stopping people from accessing, at least in a legal way, the technology that they need, that makes it very difficult to exercise those rights.

Senator Moore: Does your suggested solution cover off that situation?

Mr. Geist: No.

Senator Moore: I did not think so. That should be thought about in regulations, I would say.

One final thing. I expect, with your academia background, that you are probably familiar with the study done by Rice and Duke Universities last year.

Mr. Geist: Which studies?

Senator Moore: The study with regard to digital locks, where they say that it actually results in a decrease in piracy.

Mr. Geist: I know the study that you are talking about.

Senator Moore: Do you think that we have to have digital locks? Steve Jobs was quoted as saying that they should be gotten rid of. I know that his company profits handsomely from that. Do you think that digital locks are a thing that we should have but that we should be providing for different ways to use them?

Mr. Geist: It is a business choice whether or not they want to use these locks. From my perspective, it is not the government's role to decide whether or not they should.

Senator Moore: Given your discussion with Senator Tkachuk, I want to know what you think, not the government.

Mr. Geist: What I think is that it is up to a particular business whether or not they want to use them. I think that consumers have spoken up loudly about many of the business models that have been relying on locks, and they do not like them. If businesses want to rely on technologies that many consumers do not like in many instances that is their choice. The issue I think, from a policy and law perspective, is not whether or not businesses choose to make good or bad decisions with respect to using the locks. It is whether we want to provide these kinds of locks with so much legal protection that they effectively trump virtually all other rights that arise in the bill. That is the question.

In this instance I believe this bill goes far beyond what was required under law. There are many who argue that not only do we not need to move into a world where we have this kind of over-broad protection for digital locks, we need to seriously think about some protection from digital locks. To that end I think it would be entirely appropriate, as an example, to ensure that there is better notice and disclosure practices with respect to these locks and the sorts of limitations that exist when someone purchases some of these products, because they often face limitations that they might not otherwise expect.

We do not even have appropriate disclosure on this front. If we are not even going to move into the protection from them, at least if we are going to talk about what sort of protection they merit, I would say they merit the same protection almost any other business model does, which is a neutral approach that says if you want to use them, go ahead, and the law will protect you. However, we will not essentially provide so much advantage to this particular kind of business model that it trumps so many of the other rights that already exist in the law.

[Translation]

Senator Hervieux-Payette: My questions are for Mr. Kerr-Wilson. What businesses do you represent and how many are we talking about?

[English]

Mr. Kerr-Wilson: It is a mixture of individual businesses and some trade associations, and I can furnish the clerk are with a full list. It is Google, Yahoo, Rogers, Bell and TELUS, the Canadian Cable Systems Alliance, the Canadian Wireless Telecommunications Association. I will provide a full list.

[Translation]

Senator Hervieux-Payette: It is important to know where those people come from. On page 2 of your presentation, you talk about facilitating cloud computing. For the sake of our viewers today, so that we understand each other, the term "cloud" is used, for example, when we take a document and make it available outside our own computers, or iPads, or whatever.

Also, could you tell me what a network PVR includes?

[English]

Mr. Kerr-Wilson: It is very similar in concept to cloud computing. Right now most people are familiar with a box that sits on top of your TV and you can record programming on that box and play it back and there is a menu. A network PVR does the exact same thing except the box is now at the cable company's offices or the telephone company's offices. You pick the program you want to watch and a signal goes to the box at the cable company facilities and it makes a recording of the program. When you want it watch it, another signal goes back and it streams the program back from the box at the cable company to your TV.

It works in exactly the same way as the PVR on your TV, except all of the function is actually taking place in a secure location with backups.

[Translation]

Senator Hervieux-Payette: The people you are representing see some challenges with implementing clause 35, paragraph 31.1(4) of the bill, and are not happy with that clause. What are their main concerns?

That is a very important service; after all, we are talking about the telecom giants. What is negative? Is it a negative impact on TELUS and Rogers or on consumers?

[English]

Mr. Kerr-Wilson: I would say in this case it could be negative for both the companies and for the consumers. The issue is not with the government policy. The government's policy is quite clear: They want to remove the copyright barriers to network PVRs. The intent is that clause 35 would allow this to happen. The concern is that the clause talks specifically about making the copy and storing the copy, but it does not provide an explicit exception for transmitting the copy back.

In jurisdictions like the United States where network PVRs were introduced, they were met with vigorous legal challenges. In Australia they were met with vigorous legal challenges. This activity tends to just drive litigation. Even if the intent is clear, the concern is if there is ambiguity in the language that could cause the same sorts of lawsuits we have seen in the United States and Australia when the service is introduced.

Companies such as TELUS, Rogers and Bell want to make sure the law explicitly says that when the program is streamed back to the person who recorded it, from the cable company or from the phone company to the TV, that transmission is also covered by the exception.

[Translation]

Senator Hervieux-Payette: Are the Americans doing the same thing right now? When you talk about lawsuits, who is suing whom?

[English]

Mr. Kerr-Wilson: In the United States a cable company launched the service, Cablevision, and they were sued by makers of television programs and television stations. There were several rounds of litigation and ultimately the Federal Court concluded that the service did not infringe under U.S. law. There is a difference with Canadian law, so the court said it did not infringe.

In Australia the same thing happened and the result was the other way. The court in Australia concluded the service actually did infringe, which illustrates the point that the language you choose is very important. One language choice in the United States has led to the service being lawful and Americans can use it, and a slightly different set of language in the law in Australia has ended in a different result.

We just want to make sure that the results we get in Canada match the policy, which is that Canadians get MPVRs. That is the request.

Senator Massicotte: Just to take Senator Tkachuk's point, Mr. Geist, you said it is always an issue of balance. The starting point for most of us is basically still with property rights. We are used to that from a physical sense. It belongs to you, you have rights to it, but then, as you know, there is much legislation about property rights where it infringes upon a right. I would have started at the same point as he did. This is my work, I am the producer or the singer, and I can decide what I want to put on it, locks or whatever. That is the starting principle.

What you are saying, though, is irrespective of the rights of that producer, the owner, the public has an overbearing right to limit his rights to his product, in other words, allow access to it and so on. That is always a tough one, so that the burden of proof is always upon why. Where does it stop?

Let us say I could even agree with you, but you are saying the real solution is always 41.21(2). You are saying the government has a right by order-in-council to issue a new regulation or void the whole issue. The only thing you are asking of our committee is to also recommend that immediately. Is that accurate?

Mr. Geist: That is. Your general description is right. I think copyright law recognizes that there are those limits. That is why we have things like research, private study, criticism and review, news reporting exceptions. If a news reporter had to obtain permission from the underlying subject to use a particular clip, or so too for a researcher, they might not get that permission and it is in the interests of society to ensure that they do not have to seek that permission. The problem with these digital lock rules is that they effectively allow the rights holder to remove that ability to use these things without permission.

I think we have already struck that balance. I am not arguing for a drastic change in where the balance lies. I am saying that the same balance, the same limitations in a sense, on the rights of a rights holder that exist in the non-digital world ought to exist in the digital world as well. I am only asking for neutrality or balance in the way that we treat the same rights that speakers have, creators have, users have, educators have — as they have in the non-digital world they ought to have on the digital side as well.

I am saying that I recognize it has been a long time coming just to this point on this bill, if there is a sense of urgency in moving forward and passing the bill. The government recognized, though, that there is that potential danger of over-broad use. Therefore I recommend that you recommend using that regulatory power to create the necessary exception to restore that balance.

Senator Massicotte: They have not said "yes" but they have not said "no"; is that accurate?

Mr. Geist: There were amendments to change the law itself at committee that were rejected. The better approach, of course, in my view, would have been to fix the bill to begin with. Those amendments were rejected at committee, but now I find myself here, with the house having risen for the summer. If we are going to move on with this, there is a solution because the ministers indicated, when the bill passed third reading in the House of Commons, that there still would be time after it passes through the Senate until it actually takes effect, because regulations will be needed. Mr. Kerr-Wilson referenced some of the regulations that have to do with ISPs. The opportunity here is to use that process to address the flaw that I think was there from 2010 and, for whatever reason, was not addressed through the process.

Senator Tkachuk: We talked a little bit about documentaries. Outside of the digital world, when an artist has a performance at a theatre and the news media puts it on the news that night, I believe they have the right to use a maximum of two minutes from that performance. They cannot film the whole performance. They can put only a piece of it on TV.

How did that arrangement come about? Was that a universal agreement, an understanding, or are there actually laws that support that?

Mr. Geist: I am not sure that it is strictly two minutes. If that is the practice that some use, then it just reflects industry practice. The law goes back to what I was talking about, and this is important for both the digital locks and the fair dealing discussion you have been having. If you are exercising your rights, whether under fair dealing, criticism, review, news reporting or the like, or under these new categories, there are these six factors that you go through to determine whether you meet that standard. Two minutes might be the practice in some places, but some circumstances might dictate that you could use more, depending upon the purpose and whether you qualify. If you were engaged in a multimedia review and you wanted to deconstruct a movie or a performance and demonstrate why you thought it was either very good or very poor and you wanted to use various clips to do that, it might cumulatively add up to much more than two minutes, but the court might well say that it is reasonable to do that because you are using a series of clips and, based on the six-factor analysis, find that this qualifies for fair dealing.

The problem we have, particularly with the digital locks, is that we do not even get to engage in that analysis because you do not get to argue fair dealing for the purposes of circumvention. The mere act of circumventing itself becomes an infringement. I never get to argue, as the news reporter, the researcher, the person engaging in the critique, all the groups that exercise fair dealing rights, that it is fair dealing, because the court will stop me and say that I have circumvented and fair dealing is not an exception for that.

The Chair: Mr. Geist, Mr. Kerr-Wilson, I know I speak on behalf of all members of the committee, and I am sure on behalf of the viewing public as well, in thanking you for your excellent and understandable presentations. Yours were excellent observations on Bill C-11.

Honourable senators, in our second session this morning we are pleased to welcome, from the Canadian Library Association, Kelly Moore, Executive Director, and Victoria Owen, Chair of the Copyright Advisory Committee. From the Association of Universities and Colleges of Canada, we welcome Greg Fergus, Director, Public Affairs; and Steve Wills, Manager of Government Relations and Legal Affairs. From the Canadian Alliance of Student Associations, we welcome Zachary Dayler, National Director.

Colleagues, we again have one hour for this session. We will hear first from the Association of Universities and Colleges, then from the Canadian Library Association, and then from Mr. Dayler.

[Translation]

Greg Fergus, Director, Public Affairs, Association of Universities and Colleges of Canada: Mr. Chair, thank you for inviting the Association of Universities and Colleges of Canada (AUCC) to speak to Bill C-11. AUCC represents 95 public and private not-for-profit universities and university-degree level colleges across Canada.

[English]

I will get straight to the point. AUCC supports Bill C-11 as a fair and reasonable balance between the rights of copyright users and the users of copyrighted works. Universities really appreciate the need for balance. Universities create intellectual property, universities use intellectual property, and universities sell intellectual property.

Within universities there are faculty as researchers and teachers, students as learners, librarians, booksellers and publishers. Our organization understands keenly the need for balance in this legislation. The bill will update Canada's copyright legislation and help balance the needs of researchers, students and professors with those of creators.

Universities, as both users and creators of copyrighted works, have worked hard for more than a decade to push for a new copyright bill and see Bill C-11 as a very fair approach to competing interests.

[Translation]

Bill C-11 contains many of the changes suggested during the 2009 public consultation, including exceptions permitting the educational use of Internet materials and the recording and Internet transmission of lessons. These changes will facilitate online learning, including distance education, making university education more accessible for Aboriginal Canadians and mature students.

[English]

Bill C-11 will also permit university researchers to obtain and keep research material in digital format. These and other changes to the copyright law will enable educational institutions to take advantage of the new information and communication technologies for education and research in a highly competitive knowledge economy.

I want to stress that the university communities, small and large, research-oriented and undergraduate-focused, in all regions of the country would like to see Bill C-11 passed as soon as possible. I would like to thank the committee for the opportunity to present these views, and I welcome any questions that you may have.

Zachary Dayler, National Director, Canadian Alliance of Student Associations (CASA): On behalf of 25 post-secondary institutions across Canada representing our 300,000 students, we would like to thank you and the members of the committee for inviting CASA here today. We come before you in support of the recent copyright improvements. The shorter term for review of the bill, from 15 to 5 years, and the inclusion of education as a category of fair dealing is a step in the right direction. This new protection for teaching and learning is viewed by our membership as one of the most important changes the Government of Canada can make through Bill C-11 but, to be direct, allowing digital locks to trump fair dealing is lamentable and undermines the modernization of the bill.

The economic argument for a more open fair dealing regime is clear. Modern, tech-heavy, creative industries in the United States, for example, rely on fair use to find innovative ways to generate more wealth and income for the country. Studies point to the fact that this fair use economy amounts to 17 per cent of the U.S. GDP, and education forms a significant portion of that in direct contributions and training for future contributors. If Canada seriously wants to be a 21st century leader in innovative sectors, the U.S. example shows liberalizing fair dealing is a cornerstone of innovation. Simply, we must improve faculty's, researchers' and students' access to information or sit and watch our competitors pass us by.

The regrettable fact is that in the bill's current state, the educational fair dealing right is not enshrined as a true right, but more as a secondary right, as a digital lock can override it. Creating balance in the bill is important, and digital locks have their role, but allowing them to override fair dealing undermines the very concept of fair dealing. If a work has a digital lock, a copyright holder can limit any use of it, and fair dealing means that there can be no inherent limit if the purpose is just. If we take fair dealing seriously, it needs to be a true right and needs to trump the digital lock. Allowing digital locks to be broken for uses covered under fair dealing would be a more progressive measure and put the best materials in our classrooms to improve outcomes across this country.

There are also two further amendments to the bill which CASA hopes you will consider — an amendment to remove the self-destruction clause on interlibrary loans and an amendment to remove the requirement for professors and students to destroy their materials 30 days after completion of a course.

The first is an amendment, as I mentioned, requiring libraries to self-destruct articles they lend through digital interlibrary loans. Students have two options when taking out such an article, either print one copy onto paper or let it destruct five days after receipt. This clause undermines the way modern study operates. The benefits to digital articles are immense. I notice a number of you have laptops and iPads around the table, and that is just it. They can be carried everywhere and organized in new ways. Volumes can be searched in seconds, and citations can be automated. By requiring students to physically print these articles, the law would actively bring education and research back into the 20th century, at a loss to all Canadians.

The second amendment requires professors and students to destroy their course material 30 days after the end of a course. In the 21st century, students are taught to be information gatherers, synthesizers that can find the information that exists in the world and bring it together in a way that generates new and original knowledge. Tests that were once closed book in the 20th century are now open book in the 21st century. Requiring students to destroy the information they have built their skills on is to force them to take an open book test without the book, to build a house without a hammer. It is needless, and it does not impact the bottom line of rights holders, because students gained access to these lessons in an economically fair manner. If the cost of education does not carry with it the ability to use that education in the workforce, to drive job creation, growth and innovation, I ask what are students paying for?

We appeal to this body to move beyond whatever partisan rifts exist and consider the amendments put before you today. Take a bold step and actually modernize Canada's copyright legislation. Thank you.

Victoria Owen, Chair, Copyright Advisory Committee, Canadian Library Association: I am the chair of the Canadian Library Association's copyright committee. With me today is Kelly Moore, Executive Director of CLA. We greatly appreciate this opportunity to meet with you in the context of Bill C-11, an act to amend the Copyright Act.

I am currently the head librarian at the University of Toronto Scarborough library, and I have also been the director of a public library and a library for the print-disabled. In all of these environments, copyright legislation has had a direct impact.

The Canadian Library Association, or CLA, is Canada's largest national library association. We represent the interests of 57,000 library staff and thousands of libraries of all types across Canada.

Libraries are the memory institutions of society, preserving and providing access to the cultural, scientific and historical record. Libraries support and promulgate education, learning and creativity and underpin many aspects of civil society. They enable intellectual freedom through access to information, ideas and works of the imagination in any medium and to all members of society. However, access through libraries is under threat.

Libraries as institutions are recorded as public goods and are among society's embodiments of the public interest. They operate in the public sphere and provide information as a public good. Libraries uphold and defend intellectual freedom.

Library users, be they students, educators, scholars, researchers or lifelong learners, are the Canadian public. They are not a special interest group. Libraries represent the Canadian public, and articulating the public interest is the core of CLA's work.

CLA applauds the significant improvement to Canada's copyright regime contained in the bill. Canadians with perceptual disabilities will have use of material in accessible formats imported from other jurisdictions. The presence of education, parody and satire in the fair dealing section of the act are also commended.

For the benefit of all Canadians, CLA is seeking further improvements to the bill. Amendments are required to ensure that the legislation ultimately succeeds in its objectives of being both balanced and technologically neutral.

First, Bill C-11 has made improvements to clarify and extend user rights relating to exceptions for people with perceptual disabilities. However CLA believes the bill as drafted has the potential to significantly constrain or render proposed section 32.01 inoperable. Despite the government's intent that the bill be technologically neutral, it does not provide a generic exception for all alternate format materials for people with print disabilities. CLA strongly recommends the bill contain no prohibitions on sign language or on captioning cinematographic works by non-profit organizations.

Additionally, while CLA is pleased with the proposed changes addressing the issue of cross border lending of alternative format content, CLA does not endorse the constraints applied to that activity. The bill calls for limits on what works can be loaned based on the author's nationality, payment of a royalty, whether or not the rights holder can be located and a reporting regime.

Further, it should be made clear that the proposed requirement to not unduly impair the digital locks in proposed section 41.16 of the bill does not hinder the exercise of the exception itself for people with perceptual disabilities.

The World Intellectual Property Organization, WIPO, is currently considering a proposal on the international instrument on limitations and exceptions for persons with print disabilities. CLA strongly endorses this proposal and notes that constraints on the cross-border movement of alternate format materials are greater in Bill C-11 than in the WIPO proposal, specifically the nationality and royalty payment requirements. The Government of Canada should not introduce constraints into the act that exceed those in the current WIPO proposal while it is under active consideration.

Second, in the libraries, archives and museums section of the act, a slight change should be made to section 30.1(1), which was amended to aid libraries in preserving works. The change would be to clarify that multiple copies of works in alternative formats can be made by libraries, archives and museums for preservation purposes. Such a provision would allow libraries to make the required number of preservation copies to safeguard Canada's cultural heritage according to professional preservation practices.

Finally, an overriding concern remains the unnecessarily proscriptive protection for digital locks, as outlined in section 41 of the bill, which dramatically reduces the scope of fair dealing and constrains the new fair dealing exceptions of education, parody and satire.

Bill C-11's prohibitions on the circumvention of digital locks for legal, non-infringing purposes fails to achieve a proper balance between the legitimate interests of copyright holders and the public interest.

Digital locks overreach their rightful limits and prevent libraries from fulfilling their public interest mandate. Canadians want their statutory rights protected by Parliament. They do not want the decision on the exercise of their statutory rights left to creators and the content industry.

Without threatening the goals of Bill C-11, the removal of constraints for non-infringing activity would remedy this legislation.

CLA's recommended changes will enable Parliament to deliver the balance required in recognizing the legitimate interests of rights holders and the public interest. WIPO is actively considering a proposal on limitations and exceptions for libraries and archives, an article of which deals with digital locks. The Government of Canada should not introduce constraints into the act that exceed those in the WIPO proposal while it is under active consideration.

Libraries operate at the fulcrum of copyright's balance because they purchase works and, in that way, reward the creator and because they provide access to works and encourage learning and, in so doing, serve the public interest. The public interest in copyright, enabled by the role of libraries, is manifest through equitable access to information for the public, support of learning and research, promotion of the free flow of information, preservation of our cultural heritage and encouragement of free expression.

Without adequate limitations to copyright, the advancement of knowledge and innovation that this bill seeks to achieve could not proceed. Thank you once again for this opportunity.

The Chair: Thank you, Ms. Owen. We will move directly to our questions, and I will start with the Deputy Chair of the committee, Senator Hervieux-Payette.

[Translation]

Senator Hervieux-Payette: My question is for the representatives from the Association of Universities and Colleges of Canada. How many francophone universities in and outside Quebec have endorsed your submission?

Mr. Fergus: All francophone universities in Quebec and across Canada are members of AUCC and its board of directors. All the members of the association have endorsed the position paper I am presenting today.

Senator Hervieux-Payette: Those institutions get their funding from the Quebec Department of Education. The minister said that she supports the legislation overall, but that she has reservations about the following basic copyright principle: ". . . the exclusive right of the author of a work to authorize reproduction and performance in return for royalties."

How were you able to reconcile the position of universities who are major users, and that of the Department of Education that worries about creators and those who promote creation by allowing a small price of five cents per student, which should not cause any budget problems for university rectors?

You are surely aware that French-language works are important for us. I tend to think that the Quebec's Minister of Education, who wants to protect creators and those who promote them on markets, has an approach that favours creators and would like to maintain the system that is already in place.

Mr. Fergus: Unfortunately, I cannot speak for the Quebec Department or Minister of Education. As for the position of universities and colleges in Canada, our 95 members feel that this bill achieves a balance. We have waited for years for a debate on many of the issues addressed in this bill.

The first time a reform of the copyright system was really started was in 1988. We waited for the follow-up of that first part until 1997, although it apparently was supposed to come soon after. So you understand that we do not want to wait another 15 years for the next reform.

Yes, some concerns could be debated after the amendments or after the regulations are developed, but we are reaching the expiry date. There has to be reform. It is certainly a balance that we want to maintain. Universities, including francophone universities and, more specifically, those in Quebec, have been part of the consultation process and are still maintaining the position they had taken.

Senator Hervieux-Payette: My second question is for the Canadian Library Association. What percentage of your clients use your digital services across Canada? And how many people in the world, be they from India, England or Australia, become members? Do you have a lot of clients?

[English]

Kelly Moore, Executive Director, Canadian Library Association: I do not actually have that information. I am not sure how many of our clients are electronic users. I would say it is certainly an increasing percentage. To have that electronic access to whatever information we can make available that way is a very important part of the services that libraries provide.

[Translation]

Senator Hervieux-Payette: What kind of financial agreement do you have with those people? Do they pay every time they consult you or can they get an annual subscription? How can we make sure that royalties are paid to Canadian creators?

[English]

Ms. Owen: Most of our institutions are educational institutions where the libraries are publicly supported. There is money that comes from many sources. In public libraries, people do not pay for their individual memberships, and they do not pay for the use of the materials when they are there.

The library provides this material. They pay content providers directly, as I mentioned, for that content, and the content providers have their own way of distributing their income to the creators.

[Translation]

Senator Hervieux-Payette: I was specifically referring to foreign clients outside Canada. You realize that there are probably hundreds of millions of people outside Canada who can be clients in our libraries, whereas there are only maybe a few tens of millions in Canada.

Since the electronic age makes it now possible for us to have this access — especially in English, since it will not be as significant in French — and since the number of users outside Canada will continue to grow, do you think that it will be worthwhile for our Canadian creators?

[English]

Ms. Owen: The terms of use for the electronic content that libraries purchase are limited to their membership. Public libraries have members who have cards and that is how they get access to the material that is covered in electronic material for the most part.

There are digitization projects, things in the public domain, which are available to anybody anywhere. For the most part, the content that is paid for that is of the highest value is material that has terms of use that restrict who can have access to that. It is not the world coming in and making use of these collections that are purchased for Canadians on behalf of Canadians. These are reserved for the members of those communities.

For example, at the University of Toronto you have to be able to have your own identification that allows you to make use of these materials. The content is not wide open. We purchase the material and the creators are paid for that use.

Senator Harb: Thank you, Mr. Fergus, for your excellent presentation. I am to conclude that you believe the legislation is fair and reasonable. However, you did not close the door on the fact that, when the times comes for regulation, your organization will be out there along with libraries and students' associations in order to ensure that the fair and reasonable balance is continued through with the regulations. Is that correct?

Mr. Fergus: Senator, I am certain you and your colleagues would all agree there has never been the perfect piece of legislation ever. The question you have to ask yourself is what is reasonable for the time we have to get what we need, and the protections we need to get in place, to make sure copyright creators and copyright users are protected. On balance we do feel this is fair and reasonable.

Are there some amendments that could be taken in regard to allowing greater access for people with disabilities on the digital locks? I am certain that is a matter the government is well aware of, and the Senate and the House of Commons are aware of, and that could be addressed in other manners. However, to hold that up, given the track record of trying to get copyright legislation through Parliament, I and the AUCC would feel it is important that we are so close to the finish line, let us just take it over the edge right now.

Senator Harb: Ms. Owen and Mr. Dayler, it seemed like you were both speaking almost the exact same language. In the case of Mr. Dayler, you said, and I quote it here:

The regrettable fact is that in the bill's current state, the educational fair dealing right is not enshrined as a true right, but more as a secondary right, as a digital lock can override it.

Then Ms. Owen goes on to say pretty well the same thing.

Finally, an overriding concern remains the unnecessarily proscriptive protection for digital locks, as outlined in section 41 of the bill.

You go on and have some other concerns, but those seem to be the two glaring statements that came out of your presentations. So far pretty well everyone who has appeared before the committee has said the bill is not perfect but please do not delay it; let it go.

My question is this: Has your legal counsel told you whether those concerns could be dealt with through regulations? Obviously the government, from the look of it, wanted to put something that, as Mr. Fergus correctly pointed out, had fair and reasonable balance. Do you care to comment?

Ms. Owen: My comment would be that this is legislation, and I think it is Parliament's job to articulate, to present, to Canadians their statutory rights. It is not Parliament that looks after the regulations. This is a really important aspect of the balance in copyright. It has been there since the original Copyright Act and has been safeguarded down through the ages, but now it is at risk. I think it is the role of Parliament to ensure that our statutory rights are enshrined in this act in the digital environment.

Mr. Dayler: Students are not strolling around with lots of legal counsel to provide them with the best advice to use a government bill. From that perspective, I think that the student voice is more to look at this as an opportunity to open up the materials we have in the classroom and we should be able to do that without having our faculty, without having our librarians or our student governments and associations being caught up in more or less being police officers of copyright.

Senator Harb: Ms. Owen, normally when the bill is passed and the administration goes on in order to develop regulations, those regulations have to fit with the spirit of the bill. There is quite a bit of flexibility I would submit. The regulations come back to Parliament, to our committee called the Scrutiny of Regulations Committee. If the administration did not take into consideration some of the issues such as the one you raise, which could be accommodated as part of the regulation to meet the objective of the bill, we have a right as parliamentarians to go back to the government and tell them they need to do that. After what we have heard, maybe in his comments in the Senate the chair may make a recommendation that the government take those points into consideration.

The Chair: Thank you, Senator Harb; and thank you, Mr. Dayler, for reassuring us that students are not walking around with legal counsel. I think some others might take example of that as well.

Senator Moore: I have received various emails from people across the country, as I am sure my colleagues have, with regard to this bill. I want to read a little bit from one of them. I would invite a response from whoever would like to respond, whether it is the libraries or the universities. This email is from a Dr. Rudzik, and she says:

The educational exemptions for copying contained in Bill C-11 are too broad and the restrictions on copying are unenforceable. . . . For the publisher of the textbook such copying means the loss of the primary source of revenue.

If Bill C-11 passes in its current form, revenues generated through materials developed by Canadians for the Canadian market will fall precipitously. Textbooks and other resources will be imported from places like the United States, the UK and Australia. If that happens, Canadian content, context, culture and high standards will be lost.

She urges us to look closely at the impact of the bill on Canadian students and their perception of the world around them.

A similar email came from a man who said:

. . . my grandchildren will see their world through the eyes of authors who are not Canadian and have possibly never been to Canada.

These and others have urged that there be copying of a maximum of 10 per cent of any work and no multiple copies.

Do I have any comments on that? Do you have any concerns about that as expressed by these Canadians?

Ms. Owen: I would say that regarding the copies, as we know on the front lines of dealing with these matters in libraries and in educational institutions, when we look at copying we look at it in the context of fair dealing. We look at it in the context of what the Supreme Court has given us in terms of guidelines on how much can be copied.

Senator Moore: Are you looking at the CCH decision?

Ms. Owen: Yes, the CCH decision, and the six factors that the Supreme Court gave us. It is very narrow and one of the factors is the effect on the market. It cannot jeopardize the effect of the market. I think the legislation itself is always in the context of the Berne Convention, and the Berne Convention says you cannot impact the market. This legislation exactly fits it and it would not threaten the market.

Senator Moore: Do you share these concerns that have been raised?

Ms. Owen: I think it is alarmist.

Steve Wills, Manager, Government Relations and Legal Affairs, Association of Universities and Colleges of Canada: It is important to recognize that universities, as one example, are spending a great deal of money annually licensing works. For example, through the Canadian Research Knowledge Network, other consortium licences and one-off agreements with publishers, universities are spending over $160 million per year on digital site licences.

We have just completed negotiation of a model licence agreement with Access Copyright that some of our members will be signing. It is my understanding as well that Copibec is in the process of negotiating an agreement with Quebec universities. Nothing in this bill should have any impact on licensing revenue for collectives or the licensing initiatives or digital site licences that universities have in place. If there is any concern on the part of the collective such as Access Copyright and Copibec, it may be that publishers have, in the digital environment, taken to negotiating directly with institutions through these consortium arrangements and that they are bypassing the collective for that purpose. Nonetheless, there are still licensing arrangements in place with those collectives, and those will continue despite anything in Bill C-11.

Senator Moore: You mentioned the fees and how this bill would impact on that. Does AUCC currently have an arrangement on behalf of all universities with Access Copyright? Maybe you should tell the public what Access Copyright is. I do not think Canadians generally know how universities get the right to use copyrighted material, how this fee structure works and, most important, how it impacts on the students.

Mr. Wills: Access Copyright and Copibec are collective societies that represent authors and publishers who have indicated that they would like the collective to represent the rights that they own in their works. Since 1994, for example, universities outside Quebec have had licences with Access Copyright. A couple of years ago, Access Copyright filed a tariff with the Copyright Board that derailed things for a short period of time, but we have now negotiated a model licensing agreement that is open to institutions to sign if they wish to do so.

The important point is that, as a community, universities are spending a lot of money and will continue to do so. As I mentioned, the site licences are directly with publishers. Academic journal publishers, for example, would sign agreements so that universities would have access to their works in digital format. Universities are paying over $160 million a year for the rights to use those works. If they have a licence with Access Copyright or, in Quebec, with Copibec, they would pay further amounts for the use of works that are within the repertoires of those collectives.

Senator Moore: Obviously, $160 million is a lot of money. How is that determined? Does each university pay according to the number of registered students, and how does that translate down to the students?

Mr. Wills: With respect to the agreements negotiated by the Canadian Research Knowledge Network, my understanding is that they are just commercial arrangements. I do not know what factors go into the pricing. I do not have the background knowledge to give you that information.

Senator Moore: Who negotiates that?

Mr. Wills: The Canadian Research Knowledge Network is a consortium of universities that has banded together to negotiate directly with publishers, but it is a group that is represented in particular by library directors from Canadian universities who serve with CRKN. There is a negotiating team within CRKN that negotiates these agreements with publishers.

Senator Moore: They negotiate with publishers and they feed it through to the Access Copyright collective.

Mr. Wills: No, that is a separate process. The CRKN licences are negotiated on behalf of roughly 67 universities that are members of the consortium. They have banded together for the purpose of obtaining licences that the members of the consortium can use so that their faculty members and students will have access to all the materials that those publishers are licensing.

The Access Copyright repertoire is a different set of works, as is the Copibec repertoire, and they negotiate separate agreements to cover the use of works within their repertoires.

Senator Moore: Do you have any idea what these fees are or how this impacts on students?

Mr. Dayler, do you have some knowledge of that which you can share to the committee?

Mr. Dayler: The agreement that has been struck is less than model for students. The costs are quite high. The restrictions placed on students are quite high in terms of what they can access with regard to the content they want under this regime or that form of fee paying.

With regard to the purposes of education and tools, we are talking about giving people access to information. The fact that we are debating how much it should cost for students who are trying to get educated and to contribute is absurd when you look at the cost of education across the board.

With relation to Bill C-11 and the letters that you read, there are book importation regulations that are, again, a huge hindrance for students from the cost perspective. There is already a 10 to 15 per cent increase on textbooks that come into Canada from the U.S. and Europe.

When you talk about the costs to access this information, from the student perspective it becomes very expensive. Students can pay anywhere from $30 a year to $200 a year just to access information, depending on what the costs are to the institution and what arrangements they have negotiated.

Fair dealing protects a lot of students from excess costs, of which there are already a good number.

[Translation]

Senator Hervieux-Payette: I am not going to forget about students. I have to say that I am surprised to hear Ms. Owen's response about access to everything that falls under electronic materials — and I am talking about both Canadians abroad and foreigners in Canada. I would like to hear what you have to say about the following question.

Should we be much more open — I am not saying unconditionally — than we are, as far as I can tell? Ms. Owen said that people should be physically present and should be members. We live in an electronic world with information from everywhere, especially in terms of science. What are students' needs in that area?

You have just talked about costs. Our committee has just studied the cost of books. You are talking about an increase and the cost of books from abroad. The mark-up for French-language textbooks in Quebec is generally at least 20 per cent.

As for English-language textbooks, they are generally less expensive than our French-language books. How do you see access to works and to cultural and scientific knowledge under the new legislation?

[English]

Mr. Dayler: With regard to access to materials, we cannot turn a blind eye to the digital era, or whatever we want to call it, that we are shuffling into. I will use Acadia University in Wolfville, Nova Scotia, as an example. Part of the tuition of students who attend there goes to them having a laptop or other form of computer. It is a requirement, in order for students to participate in their studies, to have that technology. We are seeing in more and more institutions that bookstores are selling some form of electronic material. We had a conversation with Campus Stores Canada last week. They are starting to provide digital course packs and things along those lines, so we are very much going down the digital route.

I consider myself to be a young person, but first-year students to whom I speak are, in many cases, 100 per cent digital. It is just too expensive to print with the cost of a printer and the cost of ink. What we used to do with a pen and paper we can now do on an iPad. Learning styles will always vary. There will always be a need for the printed word, for whatever that be.

In terms of cost, as you might be familiar, it is interesting to note that as we are moving into the digital realm, the costs are staying the same if not going up. That kind of leaves a question mark for students in terms of if the production, distribution and shipping of this should be cheaper because we are removing certain elements there, why are we adding on this 10 to 15 per cent book importation regulation on digital material?

As I say, as did those who testified before us, we are not talking about free, open access to everything. We are talking about fair access for the purposes of education. Students respect that and understand that. For the purposes of the classroom, they are there to expand their knowledge. That should not come at a cost that prohibits that person from purchasing that knowledge in terms of a textbook or material.

Senator Hervieux-Payette: I want to comment that we almost have universal daycare in Quebec, and they have computers for every kid who is four years old. That is why I am preoccupied with the fact that it is not more available. I agree with you. I have grandchildren, and they are all in that category of using practically just a computer.

If there is an additional cost for access to the content of what a creator has done, who gets the money? Is it the author? Are we giving more money to the author and the creators? As far as I am concerned, there should be a balance. If we are talking about fairness, there should be a balance between the creator and those who are distributing it. If it is just the distributors who are getting more money, I think we have missed the point with this bill.

Mr. Dayler: In terms of who is getting the costs when I mentioned book importation regulations, yes, it is the distributors in many cases who are benefiting off of that 10 to 15 per cent increase.

It does come back down to the student perspective. We understand that to a certain extent there are costs associated with pursuing education. It is when these costs become burdensome that the problem exists. When it is not going to the creator or supporting student research or faculty research and is going to an intermediary, that drives up the costs needlessly for students.

Senator Hervieux-Payette: You mentioned universities. Of course, if the person arrives with their own personal computer, they do not have to buy one. Do you not think it is an essential element for a student who starts university to at least have the tools to be able to attend classes?

Mr. Dayler: Yes.

Senator Hervieux-Payette: To me, it is not something that is frivolous. It is something that is essential in order to have access.

Mr. Dayler: In today's classroom, definitely. The need to access technology, whether that be a computer, tablet or something along those lines, is important to be competitive and participate in the lessons fully.

Senator Hervieux-Payette: Give me a precise answer in relation to the question of open access to worldwide knowledge on the Internet. Do you think this bill will answer that question?

Mr. Dayler: No.

The Chair: Witnesses, that concludes the questions we have for this session. On behalf of all of my colleagues, I would like to express our great appreciation for your appearance today. Thank you.

We are now pleased to welcome, from the Canadian Conference of the Arts, Alain Pineau, National Director. Representing COPIBEC, we have Hélène Messier, Director General and Spokesperson for DAMIC. From SODRAC, we have Alain Lauzon, Director General of SODRAC and Spokesperson for DAMIC, and from CSI, David Basskin, President.

Colleagues, again we have one hour for this session. We will hear from each of our witnesses in turn, beginning with Mr. Pineau. Perhaps I might ask, since we have used acronyms, that you might, in your introduction, indicate the full title for our colleagues on the committee here and also for our listeners so that they are more familiar with what you are representing. Mr. Pineau, the floor is yours.

[Translation]

Alain Pineau, National Director, Canadian Conference of the Arts: Honourable senators, thank you for your invitation. The Canadian Conference of the Arts is the oldest and largest coalition in the Canadian arts, culture and heritage sector. The members I represent are sitting at my table, including today, but I would like to point out that the Canadian Library Association is also one of our members, although I am going to present views that diverge from theirs. Our members include rights holders and copyright users, which does not always make it easy for us.

It is from this large and unique perspective that I come to you today to ask that you correct the most damaging impacts of Bill C-11 on tens, if not hundreds of thousands of artists, creators, self-employed or unionized, as well as on small and mid-size businesses for whom intellectual property is the legal tool to generate revenue.

Copyright is a key element of Jobs, Growth and Long-term Prosperity as Bill C-38, the omnibus budget implementation bill, was titled. Intellectual property is one of the cornerstones of a national digital strategy for a Canada establishing its place in the global creative economy.

I submit that not to amend the most egregious elements of Bill C-11 is to put at risk the future of our culture and our economy.

[English]

There is no doubt that Bill C-11 contains positive measures for a part of the Canadian creative sector but not for the majority of Canadian artists and creators I represent. Last year, we estimated conservatively that, unless it is amended, this bill will put in jeopardy at least $126 million of revenue a year for them and only when we look at current revenue reported by collectives. To this, one must add a reduction of the revenue generated by our cultural industries, notably publishing. The new regime will force some of those industries to adopt business models not suited to their field — and I am thinking here of digital locks — while, at the same time, making access to consumers more difficult, which is quite the opposite of the bill's intent.

I will not go over the reasons that have led to unprecedented opposition from and unity of the Canadian cultural sector, from Victoria to St. John's. I have tabled with the committee the documents published over the past two years under the umbrella of the CCA. I am talking here about the critical analysis of Bill C-32, which, as you know, is what Bill C-11 was, under a different name, and also about this comprehensive list of amendments. Last January, 68 cultural organizations representing the majority of Canadian artists and creators, as well as producers and distributors, sent this list to the two ministers responsible for Bill C-11, as well as to the House of Commons Legislative Committee.

Those 20 amendments were deemed essential to clarify the legislator's intention and to secure our cultural industries. All of those amendments have been rejected by the government, which made it clear that it had no intention of changing its approach to this most important piece of legislation.

[Translation]

It is therefore to you as legislators unfettered by electoral considerations that we present to you today, on behalf of 75 organizations, three amendments which would at least help our artists, creators and entrepreneurs defend their rights in court, litigation being the first consequence of this act, not only at home but also from our commercial partners.

[English]

The first and most important of these amendments would include in the Copyright Act the so-called three-step test. This amendment would link Canadian copyright legislation to the Berne Convention, which has been signed by Canada. As a consequence, Canadian tribunals would have to take into account the elements of this test when they have to decide on conflict. This amendment is an interpretation guide as to what constitutes fair dealing, and it has already been incorporated into copyright legislation by 47 countries, signatories of the Berne Convention. We simply do not understand why Canada would not do the same.

In doing so, one would help to correct the Supreme Court's 2004 decision on fair dealing. For the first time anywhere in the world, the court introduced the notion that there is such a thing as users' rights when it comes to using a work protected by copyright. The court went on to say that economic damages to the rights' owners is one of many considerations to apply when deciding what is fair dealing and that it is not even always the most important one. This particular decision has been severely criticized by legal experts, both at home and abroad.

By including the ill-defined term "education" in the list of what constitutes fair dealing, Bill C-11 opens the gates to subjective interpretations that can only lead, if someone is caught, to costly litigation. This is something that very few cultural workers can afford, and it will, therefore, lead to considerable weakening of the sector. By including the Berne Convention's three-step test in the act, you will re-establish a balance between the purposes of the users and the consequences on the interests of artists and creators.

The second amendment that we are urging you to adopt concerns statutory damages. Bill C-11 has reduced those to the point that they are totally meaningless and, according to many, constitute an invitation to steal with little risk of punishment. Given the costs and the time involved in suing and knowing that they may receive, at most, a pittance in compensation, not enough even to cover the costs of litigation, which cultural organization, not to say which artist, could seriously consider suing someone who has infringed on their right?

We, therefore, submit to you that it is necessary to at least keep the current dispositions of the act when it comes to statutory damages.

By the way, we fully expect that this specific point is one of those that will be raised by our prospective partners in the Trans-Pacific Partnership negotiations, as Professor Geist said in one of his blogs this week.

[Translation]

The third amendment we propose is to shorten from five to three years the delay under which the Copyright Act will be revisited. Some cultural sectors already feel the effects of C-11 even before it becomes law, because of the widespread understanding that it will caution the notion that everything on the Internet is free. We intend to come back to parliamentarians with evidence of the economic impacts of this bill to ask for the speedy correction of its worst aspects.

I thank you for your attention and will respond as best I can to any questions you may have.

Hélène Messier, Director General and Spokesperson for DAMIC, Société québécoise de gestion collective des droits de reproduction (COPIBEC): Good morning and thank you for the invitation, Mr. Chair. My colleague Alain Lauzon is the Executive Director for SODRAC, an association that manages the royalties for musical and artistic works. I am the director for COPIBEC, a collective society that takes care of the copying of books and newspapers. Mr. Wills talked about me and my collective earlier.

We are here also as spokespersons for DAMIC, an umbrella organization for 14 professional associations of creators and copyright collective societies representing more than 50,000 creators. You will find the list with those associations in the document that you received.

On June 18, the House of Commons of Canada adopted Bill C-11, modifying the Copyright Act, at third reading. Under the pretext of modernizing the statute, the government has chosen to ignore its fundamental principles and completely misconstrue its spirit. Although some rights holders in the video games, software, and audiovisual industries seem to be satisfied with the provisions banning the circumvention of digital locks, for example, the main beneficiaries of the bill are institutional and commercial users (broadcasters, manufacturers of digital players) and Internet service providers (ISPs), usually to the detriment of professional creators, who are the big losers in this reform.

The Copyright Act is the basic legal tool that creators have to control the use of their works. It is essentially a particular form of property right that is divided into moral and patrimonial rights. Moral rights protect works against any form of alteration that would affect their integrity and, therefore, their creators' reputation.

Patrimonial rights give creators the means to be associated with the economic life of their works by ensuring that they will control these works' reproduction and financial exploitation for the duration of the protection set out in the act.

Yet Bill C-11 does the opposite, removing creators from a statute that purports to be about their rights. The new information and communications technologies make it possible to reproduce all copyright-protected works, easily and perfectly, and then to communicate them more rapidly throughout the world. In this context, it is more and more difficult to enforce the rights accorded to creators in the act, and these rights are subjected to numerous attacks and unjustified criticisms. Users, who have access to software and hardware, the sale of which profits only their manufacturers and ISPs, want to make it easier to access copyright-protected works. In addition, they want freedom of action and use at no charge.

In the digital environment, the economic value of copyright-protected works is based not only on the sale of material supports such as books, videocassettes, paintings, DVDs, and CD-ROMs, but also, increasingly, on the putting on line, under licence, of digitized works in catalogues.

Yet this bill deliberately quashes the exercise of the reproduction right in the digital environment by multiplying the exceptions that enable many users to avoid paying copyright fees — even though these reproductions have a value for users, a value from which creators should profit.

The Berne Convention provides that exceptions granted to users must be carefully circumscribed and pass what is called the "three-step test". This test sets out that exceptions must be limited to "special cases, provided that such reproduction does not conflict with a normal exploitation of the work and does not unreasonably prejudice the legitimate interests of the author" or rights holder.

Bill C-11 shows contempt for Canada's international obligations by including some forty new exceptions aiming to legalize activities by certain users without providing for remuneration for creators. For instance, the government has broadened the notion of fair dealing to education, parody, and satire. It has added provisions allowing all Canadians to use existing works to create new ones for non-commercial purposes and to copy a multitude of works in order to listen to or view them at their convenience and on the support of their choice.

Although some benefit from this liberalization of uses, it is to the detriment of creators as it is accompanied by neither financial compensation nor any mechanism for authorizing or denying such uses.

If the objective was to seek a new balance between creators and users, we can see this as a complete failure. Thanks to these modifications to the statute, teachers will be able to use protected works in their classes without asking permission, and they will be able to reproduce their course work to broadcast it by telecommunication in the context of remote or distance teaching. They will also be able to reproduce works in their totality for the purpose of display on interactive whiteboards or computer screens. Schools will no longer have to pay royalties to record news programs, present films, or perform plays.

This is a total expropriation of the intellectual property rights of creators in the education sector. It is as if the government had declared that from now on literary, theatre, musical, and artistic works will be considered public property.

Nor is the government concerned that it is reversing recognized principles of copyright to the effect that an original work is protected when it exists in any material form. Teachers and students will be able, in effect, to use works found on the Internet, unless a technical measure impedes use or a notice, other than the copyright symbol, categorically forbids use.

Exceptions will also exist for library users, who will be able to receive a digitized copy of a printed work through an interlibrary loan, as well as for broadcasters, who will be free to make temporary copies of protected works. And all of this, it bears repeating, without remuneration to the creators and other rights holders targeted by these exceptions. Not satisfied with limiting the possibility for creators to benefit from the economic activity of their works by accessing future or developing markets, the government also compromises their right to receive the remuneration that is already being paid to them.

In effect, it simply abolishes, or submits to court decisions, existing royalties for the use of literary, dramatic, or artistic works in teaching institutions. It also abolishes some obligations of broadcasters to pay to exercise rights of reproduction. Furthermore, it means the death, over the short term, of the private copying regime by permitting consumers to reproduce music on various devices, including digital audio recorders, without extending the royalty for private copying to these new devices.

The new exceptions introduced into the bill mean a major drop in income for creators and the abolition of their right to authorize or reject the use of the work. Creators will also become entangled in a litany of legal procedures to prove that acts taken by users constitute an infringement of their right.

Who else is ordered to work for free or to go to court on a regular basis in order to prove their ownership right?

Alain Lauzon, Director General of SODRAC and Spokesperson of DAMIC: Access to protected works already exists. Why must creators offer their work for free? The exceptions crystallize the misunderstandings and dissent among the parties involved in the revision of the Copyright Act. The justifications made for each of these demands are varied. Sometimes they are philosophical and social: "works of the mind are made to be shared."

Sometimes, they are economic: "revenues generated by the exploitation of protected works are monopolized by a few large companies and do not reach the initial creator"; "we must not unduly enrich the large companies that deprive creators" or, on the contrary, "creators must manifest their lack of interest in money, since what counts above all is the creative act." Yet professional creators are asking simply to earn a living with their artistic work.

The users' attitude is supported by a government that is more and more attentive to their claims, to the detriment of those of creators. The government is saying: "we must legislate these practices since a majority of Canadians like them." Perhaps we should start a movement against paying income tax; it would quickly gain enough support to justify its legalization.

Yet, since 1925 for music and for almost 30 years for the other categories of works, a comprehensive network of copyright collective societies has been created to respond to the needs of users by allowing them to address centralized gateways for the use of a multitude of Canadian and foreign works. The societies were set up by creators to ensure access to works that is respectful of the rights of creators and other rights holders. And, since their boards of directors include representatives of rights holders, they ensure that the conditions for implementing licences do not impede the marketing of works and the development of new markets for them.

Creators do not have the means to police the Web and pursue violators. The Canadian government is establishing in the act the least restrictive responsibility regime for ISPs, whereas numerous countries have instead chosen to make ISPs more responsible for the content that circulates on their networks via notice and withdrawal systems, or by forcing them to institute graduated countermeasure mechanisms against recidivists, or filtering to detect the illicit uploading of copyright-protected works. Claiming that they are incapable of controlling all of the information residing on their networks, the ISPs have obtained the right not to be held responsible for the illegal uploading of copyright-protected works to the websites that they host.

If such a provision is adopted, the responsibility for policing the Web will fall onto the shoulders of creators and their copyright collective societies, which assuredly do not have the means to perform this task.

In addition, the bill contains a provision on pre-established damages that lowers the ceiling for damages for violation for non-commercial ends. Whereas fines currently may be between $500 and $20,000 per illegally used work, the bill provides for damages between $100 and $5,000 for all works that violate the statute.

This is a measure that will discourage copyright holders from undertaking a lawsuit, and violations will only multiply since the risks incurred will be minimal.

Finally, aside from a section recognizing copyright for photographers, designers, and portrait artists, which, however is reduced immediately by an exception, Bill C-11 fails to include a resale right on artworks, a right that 59 countries have already adopted.

In conclusion, DAMIC supports the points made earlier by the Canadian Conference of the Arts.

[English]

The Chair: Thank you very much, Ms. Messier and Mr. Lauzon. Mr. Basskin?

David Basskin, President, CMRRA-SODRAC Inc. (CSI): Thank you. You asked for acronyms to be explained. I am happy to do that. CSI is a joint venture of two copyright collectives: CMRRA, which stands for the Canadian Musical Reproduction Rights Agency, and SODRAC, which my friend Alain Lauzon is the head of, which stands for Société du droit de reproduction des auteurs compositeurs et éditeurs au Canada.

Essentially we are both copyright collectors that represent songs, not recordings of songs but the underlying songs themselves, and we represent the authors and the owners of the copyrights in those songs. In the music business, those copyright owners are usually called music publishers.

Our business is the licensing of the reproduction of music. You know that copyright is a bundle of rights, and one of the key rights in that bundle is the right to make reproductions and the right to authorize reproductions. That is our business.

We license record companies, Internet companies like iTunes and the subject of our intervention today; we also license commercial and radio broadcasters for the copies that they make.

We formed CSI as a joint venture to reduce the complexity of licensing, and it has been a great success. We can deliver the rights to the entire combined repertoire, which is virtually all of the songs that are in existence and are used through a single point of contact — a single licence. We do not oblige the users to try to figure out which one of us represents which song. Therefore we have reduced the cost and the complexity through this joint venture. We also use this joint venture, among other things, to licence online services.

As I said, we license radio broadcasters for the reproduction of our songs. All radio broadcasting — commercial, public, satellite — involves the reproduction of music, making copying for a variety of purposes. The days are long past when broadcasters would drop the needle on a record or play a CD. Everything is automated today, everything is run from file servers, and that is where our songs are copied to. In addition, broadcasters constantly make copies of music for other purposes — programming, review of new songs, and so on. It is the technical lifeblood of automated radio broadcasting.

This degree of automation is extremely important. It has enabled broadcasters to reduce the head count in their companies and to operate multiple stations from a single location. Virtually every radio station today is automated, and it all rests on copies of music.

For more than a decade, CSI has licensed this use of our songs under a tariff that has been certified by the Copyright Board of Canada in a public process. It raises about $12 million a year for songwriters and publishers. The board sets these royalty rates taking into account the way broadcasters use our rights and the way they make copies as well as their ability to pay. That is why, for instance, there is a lower royalty rate for small market stations and lower rates for stations that use less than 20 per cent of their air time for music — low-use stations. We call this the broadcast mechanical tariff and it reflects a critical balance that was established in our copyright law in the amending process that began with phase one in 1988. As you heard earlier, rights holders are entitled to be compensated, but they are also expected to make their works available, so it is a balance between the needs of the users and the rights of the copyright creator and owner.

The broadcasters need access to our rights because they use them constantly. This was recognized in 1997 when section 30.9 was enacted. The broadcasters were granted an exemption from liability for the making of such copies for 30 days, unless the rights were made available through a collective. One of the objections they had was the difficulty of finding out who owns the songs. The principle recognized in the act was that if the rights owners are prepared to make all the works available through a collective licence in advance, then the users will have to pay.

That is what we did. We made the rights available collectively, proposed a tariff to the Copyright Board, went through a public and contested process, and emerged with a fair arrangement. Broadcasters enjoy the value of copying our songs and they pay us a royalty. It is a straightforward matter; value is consumed, value is paid.

It is worth noting that no broadcaster has ever stepped back from running its operation of file server copies. They have not gone back to playing songs from individual CDs or records, because automation delivers a host of advantages — value for value.

Sadly, clause 34 of Bill C-11 upsets this applecart for no good reason. It eliminates the exception to the exception that makes the 30-day exception conditional on the availability of a collective licence. The bill would deprive us of compensation for the use of our rights. It is unfair. It upsets that meaningful balance between the interests of creators and users for no good reason that we can see.

Everybody who supplies goods, services and rights to broadcasters — on-air talent, ad sales people, vendors of everything from computers to furniture to vehicles — all get paid in the whole value chain. We are a supplier of a right so critical to the operators of radio that no broadcaster would dream of ceasing to use that right to reproduce music. Yet, the effect of Bill C-11 is to expropriate our rights and provide no compensation. Unique among the provisions of this bill, this provision does actual harm to songwriters and copyright owners who are being told that they must give up their rights for no compensation. It is massively unfair and completely unjustifiable.

The use of our rights by broadcasters will continue unchanged. All that will be changed is that those who create the music will no longer be compensated for that 30-day period. Specifically we ask that you recommend the removal of clause 34 of the bill. It is a simple matter of fairness. Value paid for value enjoyed, like property rights themselves, is a fundamental principle of our economy and our law.

There are other provisions of the bill that are sufficiently vague that they could be used to our detriment. Provisions dealing with backup copies, copies made for technical purposes, format and time shifting and private copying do not make it clear that they are not intended to be applied to the commercial environment of radio broadcasting. This uncertainty may only invite wasteful and costly litigation.

Finally, to echo my friend's concerns, the impact of these changes is, we believe, a violation of the three-step test that you have heard referred to. We certainly support the Canadian Conference of the Arts on this point and the other issues they have raised.

The impact of this change will violate the three-step test because it conflicts with the normal exploitation of musical works and unreasonably prejudices the interests of authors. Commercial radio has never been more profitable than it is today. The broadcast mechanical tariff represents approximately 1.2 per cent of the revenue of broadcasters, far less than that for small market stations, but for song writers and publishers this is critical keep-the-doors-open money.

Senators, we urge you to amend the bill to leave the existing broadcast mechanical regime in place and we ask that you recommend the deletion of clause 34 of the bill and maintain the vital balance between the interests of creators and users of works which government claims to support and which would certainly believe in.

Mr. Lauzon and I look forward to your questions and thank you for the opportunity.

[Translation]

Senator Hervieux-Payette: It is a pleasure to have this discussion with you. For me, what I am learning is a concern, that the Supreme Court ruling has become nothing less than a kind of support for this bill, giving more weight to institutions and basically none to creators.

Could you compare this with what happens in France and the United States, especially for music and film? What is it in the Supreme Court ruling that gives more weight to users and less to creators?

Ms. Messier: When the Supreme Court brought down its ruling in 2004, it was about publishing. The case was about law books, actually. The Supreme Court interpretation was that, given a principle of common law and given an exception in the act, lawyers trained in Canada had to interpret it in a restrictive way. The Supreme Court overturned that principle, by saying that, basically, exceptions in the Copyright Act should be seen as rights for users and that they should be given a large and liberal interpretation.

The change, in my view, is the balance in the Copyright Act. When users negotiated with us or referred to the act, they would say: "anyway, if we go to the Supreme Court, chances are that we will win because the principles have to be interpreted largely and liberally."

Mr. Geist is right to say that the interpretation principle has two stages. First, we have to define if it is one of the aspects of fair dealing defined in the act. Subsequently, six factors are applied, unlike what happens in the United States, for example, where they do not have fair dealing, but fair use.

In the United States, it has been determined that market impact is a determining criterion. In Canada, it has been determined that it is one of several criteria. In the United States, the determination was to consider alternate solutions, such as the possibility of having a licence from a management body. In Canada, the possibility of licences has been specifically rejected as an alternate solution to use or reproduction. The claim was that it would contravene the act. That is one of the major differences.

In France, they have chosen to apply the treaty, because they are also signatories to WIPO, but they make very limited exceptions. There is one for education, a single use for teaching purposes. It is restricted to educational institutions, which is not the case in Canada where that definition does not exist. They also exclude all textbooks whose only market is in schools, and there is remuneration for everything. So every time an exception, or a legal licence, is granted, in Europe, remuneration is involved. Perhaps my colleagues in the music industry would like to add something from their point of view.

Mr. Lauzon: I share exactly the same point of view in terms of fair dealing. As to the section of the act — not the decision — we have an agreement with the Department of Education in Quebec under which rights holders are paid for the use of their works.

When you look at the difference between the United States and Europe, for example, we deal specifically with the countries on the continent of Europe, with all of them. The WIPO treaties certainly govern everything, and, under those treaties, the three-step test is interpreted very strictly for any exceptions. But when you look at the United States, you see that fair use has a wider meaning. It brings in a whole legal aspect, the legalization of the process against the fact that the exceptions are more specific, as Ms. Messier explained. They are more restrictive in terms of the possible interpretations.

That is why for us, for exceptions, we want the three-step test to be the direction that the act goes in to guide the courts in making strict interpretations. In the CCH case, that was not done.

Senator Hervieux-Payette: I have a more technical question. Would our authors, francophone or anglophone, from Quebec or elsewhere, be better off using American or French publishers and distributors in order to get the protection they need? If our creators went off to publish in Europe, it would mean the loss of a whole lot of them.

Ms. Messier: Unfortunately, Canadian law applies on Canadian soil. That is why this Canadian law is attracting so much attention internationally. It is because, on Canadian soil, works from France, from the U.S. or from Australia will now also be subject to the new law. That is why there are so many protests abroad because foreign publishers, authors and artists are no longer very keen on seeing their works being used so generously by users with no remuneration.

There has been a lot of reaction overseas about this bill; it constitutes a dangerous precedent and, people say, a kind of negation of the three-step test that has no parallel anywhere else.

[English]

The Chair: I will put you down for a second round, unless it is very quick.

Senator Hervieux-Payette: It is very quick.

The Chair: Good.

[Translation]

Senator Hervieux-Payette: Mr. Basskin, you mentioned lawsuits, as did others. There is the matter of legal fees. I want to draw a comparison to the Robinson case, which, for my colleagues in the other place, is one of copyright.

The Robinson case cost $4 million in legal fees and the $5 million amount that the lower court awarded to the author was reduced to just over $2 million in the Court of Appeal. They are now before the Supreme Court.

That means that an author had to spend $4 million in legal fees to have his rights upheld. That is not small change. You can see amounts like that with Rogers, TELUS, or any large company. But which Canadian author has the means to go to court to defend his rights?

Ms. Messier: And it took 16 years, in Claude Robinson's case.

[English]

Senator Tkachuk: Mr. Lauzon, Ms. Messier and Mr. Pineau were talking about areas where they are not getting paid. Mr. Lauzon, where does the bill exclude the music owner from getting paid? As a consumer, I buy a DVD or a piece of music. What is the problem here? Where do you not get paid?

[Translation]

Mr. Lauzon: Thank you for the question. We are not paid for secondary use. In 1997, the legislation introduced a private copying regime. The private copying regime compensated rights holders for copies made privately. And the private copying regime is specifically for different media, according to what Canadian courts have told us.

So what does that do? You make a copy of a CD that you have bought, for use in your car or anywhere else, and the rights holders in Canada are compensated, as they are in a number of other countries around the world, though not the United States. So we are compensated. At the moment, the private copying regime —

[English]

Senator Tkachuk: How are you compensated if I make a copy of the CD for my car?

Mr. Lauzon: When the copy is done, it is done on another CD. The manufacturer of the blank CD is getting paid on that. We receive compensation out of that.

Ms. Messier: A few cents.

Mr. Basskin: Part 8 of the Copyright Act, as Mr. Lauzon has identified, passed in 1997, legalized private copies. Prior to 1997, every time a Canadian hit the record button to copy a cassette, if you will, to another cassette, if they were copying cassettes, or an LP, they were infringing copyright. No one was ever sued. No lawsuit was ever undertaken, but millions and millions of recordings were being made with no compensation to the performer, the producer, the song writer or the publisher. In 1997, the government did the right thing by legalizing the making of private, non-commercial copies and providing for a compensation mechanism that has raised over $200 million for those groups. The use of CDRs is declining, and that is a fact of the marketplace. Unfortunately, because the government has chosen not to address the reality of the marketplace, billions of copies of songs are continuing to be made on all kinds of devices, and because the government has decided not to address this shortcoming in the legislation, the private copying regime will not last much longer. Compensation will come to an end, but billions of copies will continue to be made and enjoyed, for which there is no legal authorization.

Senator Tkachuk: You were compensated by a tax on the CD.

Mr. Basskin: No, sir, it was not a tax. Taxes are paid to government. This is a levy that was collected and paid to those make the music that is being copied.

Senator Tkachuk: To the consumer, it really makes no difference. What you are saying is that if I put music on an iPod, I should pay more for the iPod.

Mr. Basskin: That would be our preference, that there be a levy applicable so the sale of such devices. We recognize that the law does not provide that today, and we believe the bill should have been amended to say so.

Mr. Lauzon: Out of the G8 countries, except in the United States, all the countries in Europe that we do business with all have private copying that is extended to digital audio recorders. If the law passes and we have no other private copying levy on the CD, that means that, in the short term, we will not be able to receive money that we receive coming from other countries. We will lose the private copying regime that we have here in Canada, and we will lose all the money that comes from foreign societies, money that comes from the Canadian creators and publishers as well.

Senator Tkachuk: What will happen when I put the music on a stick and then I plug the stick in my car? There is no levy on the stick.

Mr. Basskin: That is correct, sir.

Senator Tkachuk: How can you stop this from happening?

Mr. Basskin: We have never tried to stop it from happening. That was never our intention. We have never asked for people to stop doing it. We have merely asked for compensation for the value of the copies.

Let me suggest that I doubt that you or anyone you know has ever spent any time listening to an empty iPod. People buy these products in order to copy music, and our research shows that over 80 per cent of the music on peoples' iPods comes from sources other than paid sources.

Senator Tkachuk: I buy the iPod to play music that I own. I already bought that piece of music. In many cases, when I bought that CD, the reason I like putting it on the iPod is I may like three songs on it and the rest I never listen to, so I am paying for music that I never use.

Mr. Basskin: We have no problem with you making the copies, sir. We simply want to be compensated for the value of the copies.

Senator Tkachuk: I am surprised they are not charging me for listening to it, actually.

Senator Moore: Thank you, witnesses, for being here. I have three questions. Mr. Pineau, you mentioned in your brief the Berne Convention and the three-step test. You said 47 countries are signatories to the Berne Convention. Is Canada one of those signatories?

Ms. Messier: Yes, since 1928.

Senator Moore: Could you put on the record what the three-step test is, please?

Mr. Pineau: Not being a lawyer, I will hand that over to my very competent friends here. Probably Ms. Messier could deal specifically with that. I would fumble the ball.

[Translation]

Ms. Messier: The three-step test is in article 9(2) of the Berne Convention. It says that exceptions should be limited to certain special cases, provided that such reproduction does not conflict with a normal exposition of the work and does not unreasonably prejudice the legitimate interests of the author. It is also found in the TRIPS treaty and in various other treaties that Canada has signed over the years.

[English]

Senator Moore: That is the desired result, but I thought that there were three things that had to be considered to get to that result.

Ms. Messier: The three-step test is for special cases that do not prejudice the legitimate interests of the author.

Senator Moore: Yes, and the creator.

Mr. Basskin: The three-step test is meant as one of the issues that signatories to the convention have agreed to. They are saying, as a method of guidance and interpretation, that, in creating exemptions to the rights of authors, those exemptions will not unreasonably prejudice the interests of authors, will be limited to certain special cases and will not conflict with the normal exploitation of the work. It is a method of interpretation. It is a general limitation. What the CCA is suggesting and what we certainly endorse, as 47 countries have done, is to actually incorporate that vital provision into the Copyright Act as a method of interpreting the application of the exemptions. We are unquestionably going to be thrown into litigation. The courts need this guidance.

Senator Moore: Do you know if the Copyright Law in the United States includes the three-step test?

Mr. Basskin: The U.S. is a signatory to Berne.

Senator Moore: It is?

Mr. Basskin: Yes.

Senator Moore: Are you saying that the bill before us is inconsistent with the Berne Convention?

Mr. Basskin: It is deficient in that, under Canadian law, signature to a treaty does not become an enforceable statute. It is an agreement that Canada has made whereas, when the U.S. signs a treaty, that effectively becomes U.S. law. In Canada, adherence to a treaty is kind of a statement of the intention of the government, but it is not individually enforceable. We believe that this principle is so important that it needs to move right into the act so that those whose rights are at stake can rely upon it as a guide to the interpretation of exemptions.

Senator Moore: I want to ask you, Mr. Basskin, about the Broadcast Mechanical Tariff, which I guess is referred to as ephemeral rights.

Mr. Basskin: The Broadcast Mechanical Tariff is the regime by which we are compensated for the making of those copies.

Senator Moore: Exactly.

We were told that it is currently grossing about $21 million, which is distributed then to the creators.

Mr. Basskin: In our hands, it raises about $12 million a year. A similar amount is also collected by groups representing performers and record companies for the reproduction of their sound recordings. As you know, there is a distinction between the song and the recording of the song. Our groups represent the song.

Senator Moore: Do you know if the $21 million is an accurate figure?

Mr. Basskin: I believe it is in the range of $21 million to $23 million, something like that.

Senator Moore: I understand that the gross revenue in the radio broadcast industry is $1.4 billion a year, and you say that this ephemeral right is, in your case, 1.2 per cent.

Yesterday, I asked the minister about this, and he said that it is important that we remove it so that it does not hurt the business interests of small market radio stations. You say that commercial radio has never been more profitable than it is today. The Broadcast Mechanical Tariff represents 1.2 per cent of the revenue of broadcasters and far less for small market stations. Could you tell me how your collective deals with small market stations?

Mr. Basskin: Absolutely, sir. It is dealt with in the tariff approved by the Copyright Board, and I am happy to provide the committee with a copy of that for reference.

Senator Moore: That would be useful.

Mr. Basskin: Section 5 of the approved tariff, which deals with all the tariffs that are paid by commercial radio, says that, for a low-use station — a station that uses less than 20 per cent of its time for music — it is 0.135 per cent of their first $625,000 of gross income, 0.259 per cent of the next $625,000 and 0.434 per cent of the next.

Now, when we get to music stations, it is 0.304 per cent of their first $625,000 gross income, and I will supply the committee with a quick calculation to illustrate what that means.

The Chair: Could you send it to the clerk?

Mr. Basskin: Yes, of course. It is 0.597 per cent of the next $625,000 and 1.238 per cent of the rest. This means that small stations pay a very small amount. It is a graduated scale, and I submit that it is a fair method of addressing the interests of small stations. Small stations are not asked to pay at the same rate as large stations.

Senator Moore: That is the point I wanted to hear you make because I was concerned about that.

Mr. Basskin: We will provide you with this and with the calculation.

Senator Moore: That would be useful.

A final question for Ms. Messier: This is an interesting thing because I am a great fan of the arts and artists. You say, on page 6, that Bill C-11 fails to include a resale right on artworks, a right that 59 countries have already imposed. Can you talk a little bit about what a resale right is and how it works in the 59 countries that now have it?

[Translation]

Ms. Messier: Yes, that is the resale right on artworks. The French term, droit de suite, is often used. At the beginning of their careers, artists frequently sell their works quite cheaply because they are not well known. Works can increase in value, sometimes appreciating a great deal over the years. After an artist dies, the increase can be even more, with works being sold for tens or hundreds of thousands of dollars. But the droit de suite keeps track of the economic value of the works of art and allows artists, or their estates after their death, to get a percentage of the sales conducted by a commercial intermediary. So artists get some of the money from the sale and can benefit from the fact that their works have appreciated in value.

[English]

Senator Moore: So it is a per cent. Who polices or monitors it? Is it the galleries? How does that work?

[Translation]

Mr. Lauzon: The collective management organizations. I manage the rights for visual artists. So my colleagues in Europe, where the droit de suite exists, collect a percentage of the price from the auction house. As Canada does not have this provision in the act, Canadian artists cannot benefit from the droit de suite when their works are sold abroad. So if we could get the droit de suite in our legislation, it would allow Canadian artists to benefit both in Canada and abroad.

[English]

Senator Moore: Could you send information to the clerk with regard to the countries and the arrangements?

Mr. Lauzon: Yes, we can provide that.

[Translation]

Senator Maltais: Welcome. I am no expert in copyright or in artists' rights, so let me ask you some questions with very concrete examples so that I can get this change straight in my mind.

When I was in elementary school, we read Menaud maître-draveur by Félix Leclerc. Did Mr. Leclerc get anything from the copyright when it was taught in school?

Ms. Messier: Maybe not then. But since 1982, all schools in Quebec have been covered by a licence that allows them to copy works. So, if you were given a copy of a poem by Félix Leclerc now, Félix Leclerc, or his estate in this case, will receive payment from COPIBEC.

Senator Maltais: But in my time, that was not done.

Ms. Messier: This morning, the university representative mentioned something between $30 and $200. I do not know how he did that calculation, but the agreement that has just been negotiated between the Canadian association and Access Copyright, the collective management organization that manages those rights, provides for $26 per year, per student. I just wanted to point that out.

Senator Maltais: A few years ago, a not-for-profit group was established to sing French songs. The group was made up of retirees; the idea was to entertain seniors in their homes. They decided to put on a show of Compagnons de la chanson songs. There was a lawyer in the group. He and I handled the copyright issue. So we had to get in touch with the last surviving Compagnon in France. Since the group here was not performing for profit and was not making any recordings, he decided not to charge anything for the musical arrangements. But the words and music were American. We did not ask the Americans what they thought. Were we doing anything illegal?

Mr. Lauzon: Yes, but let me clarify something you just said. When you put on a show, whether for profit or not, a public performance organization called SOCA collects the fees. It has to operate through the private copying regime and this comes under fair dealing. So the fee is commensurate with the use.

When you work that way specifically, you have to ask for the rights. You have to make a copy, and that involves the right to say yes or no.

Senator Maltais: We wanted the arrangements. The music was American. They made arrangements from songs that were translated from American originals.

Mr. Lauzon: It is very simple. The collectives that are established in Canada are there to facilitate things. My colleague deals with American repertories, and I am in charge of Quebec and European repertories. If you come to see us, we will issue a licence to you on behalf of the collective. The rights holders can then choose whether they want to be remunerated or not. They have that right, since that is their intellectual property.

Senator Maltais: Let us say some young high school students are preparing an end-of-the-year play in which they incorporate excerpts from a Michel Tremblay play. Would they be governed by your collective in a case like that?

Ms. Messier: There is another collective, the SOCA, which manages drama. There is an agreement in Quebec between the Department of Education and that management collective to allow for the production of this type of play in a school environment. However, under the new copyright legislation, which does discuss the fair use of material in educational settings, the theatre people and Michel Tremblay will not necessarily receive any remuneration, because it depends on the interpretation that will be made of that provision; but for the time being, they are remunerated.

Senator Maltais: So if some grade 12 high school students only include one brief passage from the play, you will be charging them a fee?

Ms. Messier: That is already covered in an agreement with the Department of Education. They have only to indicate what passages they used in order to allow the management collectives to distribute the money equitably to the authors, but the department pays.

Mr. Lauzon: It is the same thing. All of the collectives have an agreement with the Department of Education, regarding the use that is made of literary works in primary and secondary schools.

Senator Maltais: I like classical music. On the Internet, you can find the complete collection of Beethoven's works. I only have to press on a button to hear it. Am I breaking the law?

[English]

Mr. Basskin: The music of Beethoven is in the public domain and thus no one gets paid for its use. The performances might be paid for and the performers might be paid, but the music of any composer who died prior to 1962 is in the public domain.

Senator L. Smith: I have a question potentially for the group. Could you walk me through the 30-day exception to exception? How much money goes to the group? How much money goes to the artist? What about the whole digital lock? I am trying to understand it.

Mr. Basskin: There is no real functional relationship between the question of digital locks and the ephemeral exception. Let me quickly run it down for you.

Radio broadcasters get the right to copy sound recordings and songs. In other words, the copies they make, if they are made without the consent of the owners, would normally be an infringement. Section 30.9 says that it is not an infringement, in other words, that activity is exempted. That is why we call it an exemption. It is an exemption from the normal rule that unlicensed use would be an infringement. That exemption lasts for a period of 30 days. As the law presently stands, without the proposed sections in this bill, that exemption is conditional.

If those whose rights are being used make their rights available through a collective licence, as we do, the exemption is removed and it obliges those who wish to make the copies to pay the rate set by the Copyright Board.

The change that would be made by this legislation would be to remove the conditional aspect of the exemption and simply say, without qualification, a radio broadcaster can copy and retain those copies for up to 30 days without infringing copyright. That will unquestionably reduce the value of the tariff, as the Copyright Board has set it. Precisely the value of that reduction has yet to be determined, but we believe it to be substantial.

Who gets the money? In the case of the copying of songs, that money is shared between the author and the publisher, and sometimes author and publisher are the same. Gordon Lightfoot, who owns his own copyrights, is both author and publisher, to give you one example. There is every example you can think of. Our job as collectives is to make sure the right people get paid based on the use that is made.

In the case of the copying of sound recording, it is the same thing. The money is shared between the performer and the producer.

Senator L. Smith: What do you estimate this elimination would be?

Mr. Basskin: Presently the value of the tariffs combined is in the $23 million, $24 million per year range. It is difficult to speculate on the exact reduction. Doubtless that will in some fashion end up being fought out in front of the Copyright Board. I am certain our friends in the broadcasting industry will say they should have the rights for nothing.

Senator L. Smith: How is the money split? If it is $21 million, how is it split?

Mr. Basskin: The roughly $12 million we collect is distributed pro rata to the authors and publishers of the songs based on radio usage data. I presume the record companies and performers split it in the same way.

Mr. Lauzon: The only information we have regarding that comes from a press release issued by the Copyright Board for 2009. If you want, we can provide you the information on what would be the split.

The Chair: Thank you very much.

That concludes our questions for round one, and we are basically out of time, but I do have one question that I believe the deputy chair would like to ask before we conclude.

[Translation]

Senator Hervieux-Payette: How many of these collectives are there in Canada? As an administrator, how are you paid? What will the future of these management collectives be once the bill is passed, given that you play an important role in the distribution of compensation to producers and writers?

[English]

Mr. Basskin: There are a lot of organizations in the entertainment and cultural industries. Not all of them are collectives. There are relatively few active collectives. We can speak best about music. There are collectives that represent authors and publishers for different purposes and some that represent performers and producers.

I would not care to give you a number. We could perhaps make a submission. However, the future of collectives is very important. Collectives serve an absolutely vital role. They make the rights available typically through a single transaction. The cost of chasing down and identifying the owners of works is enormous. That is the job we undertake by assembling the rights and negotiating on their behalf. In many cases, we level the playing field between the interests of enormous corporate users and broadcasters, record companies and others, as well as individual creators and composers and rights owners, who would not have the ability to do it on their own. We make the rights available, level the playing field and systematize transactions that would otherwise be completely unaffordable.

That role for collectives is more important than ever because we are living in a market where there is an ever-exploding number of transactions, but each transaction is worth only a tiny amount of money. If you cannot do it collectively, you cannot get paid.

[Translation]

Mr. Lauzon: According to our information, there were 46 collectives. In the previous panel, we heard the representative of the Balanced Copyright Association set out the list of names such as Google, et cetera. How can an author, a composer or a publisher, no matter how important or how independent they may be, go to these giants to demand fees?

There has to be a fee system and they are the ones who are members of the collectives. This gives them some collective weight to go and negotiate. Bill C-11 diminishes the economic power of the collectives, and thus of the creators. Normally, out of a dollar collected, a certain percentage is kept by the collective and the rest is distributed among the rights holders.

[English]

The Chair: On behalf of all the committee, I would like to express our great appreciation to our witnesses for your appearance today. You have been very helpful in our deliberations.

Honourable senators, in our fourth session this morning we are pleased to welcome, representing the Association National des éditeurs des livres, Richard Prieur, Director General; and Jean Bouchard, Vice-President. We welcome also, representing the Union des écrivaines et des écrivains québécois, Véronyque Roy, Legal Counsel.

Mr. Prieur, the floor is yours.

[Translation]

Richard Prieur, Director General, Association nationale des éditeurs de livres (ANEL): Honourable senators, ladies and gentlemen, thank you for giving us one last opportunity to tell you why we consider that Bill C-11 is a piece of legislation that will weaken our industry and our national education.

The ANEL represents a hundred French Canadian book publishing firms of all sizes, operating in all fields of publishing. On the issue of copyright, the ANEL has voiced its position on all previous bills, consistently asking for the reaffirmation and strengthening of our copyright law as well as its harmonization with the copyright laws of other countries so that our publishing firms may compete on a level playing field with the other players in other countries.

Today we are here to tell you why we feel the bill needs to be amended. The overarching question that immediately draws our attention is the fair dealing exception for education, the measure we feel will be by far the most harmful to the book publishing world.

Why should the bill be amended? First of all, because it reverses the broad principles of copyright, and does not amend the 2004 jurisprudence, which transformed exceptions into users' rights; it multiplies new uses for works without permission or compensation; it does not always provide definitions that set out the limits of new permitted uses; it bases the protection of works on technical measures rather than on legal protection, and it reduces the statutory damages to the point of encouraging violations.

Secondly, because it runs counter to the rules in international conventions such as the Berne Convention, and disregards its commitment to legislation that would not weaken the interests of creators excessively, since we estimate that 44 exceptions are clearly excessive; by not submitting the unauthorized reproduction to the three-step test of the Berne Convention; by creating a fair dealing education exception which is directly in conflict with the normal use of school books, and by authorizing these unauthorized uses for works from other countries as well.

Thirdly, because it weakens the industry by interfering with the sources of revenue, those from the collectives as well as the revenue generated by normal marketing activities, by jeopardizing 40 years of efforts to develop a truly Canadian industry, by jeopardizing the $25 million in investments made by francophone book publishers in digital books, and by forcing protection through numerical locks which may be well-adapted to the film and software industry, but are not in keeping with the practices and business models of the book publishing world, and, finally, by compromising publishers' capacity to quickly move to design and produce a diversified range of educational materials for the digital classes of tomorrow.

And fourthly, it weakens the relationships between the world of publishing and the world of education. It is sad that this bill pits the publishing world against education. The wide-ranging expertise of authors and of the publishers of school, scientific and technical books, is the cornerstone of education.

We invite you to look at the book industry as the research and development division for educational material used in our education systems. There is an exceptional, tested cooperation between the public sector and the private sector, an exemplary partnership which ensures the diversity of supply, and sound competition, to the benefit of students and families. I would like Jean Bouchard to add a few points to this brief statement.

Jean Bouchard, Vice-President, Association nationale des éditeurs des livres (ANEL): ANEL believes that the single most important thing one could do to improve this law would be to leave out the word "education" from the fair dealing exception.

By granting educational institutions and any for profit or not for profit enterprise or organization the right to the free use, without permission, of copyrighted material, this exception is by far the one that will have the most serious impact on the publishing industry. In its current form, that exception has an impact on textbook publishers, as their works are photocopied wholesale, and literary publishers lose the commercial advantages that can be derived from having a work studied in class.

Moreover, this right is created even though educational institutions have no problem accessing material thanks to the copyright licensing agencies. It represents a mere half of 1 per cent of the total budget for education in Canada, which hovers around $70 billion per year.

Without a precise definition of fair dealing, everything has been said about this exception. The government says it means restricted to a structured context, including private training but not for the public in general. The Canadian University Teachers Association defines fair dealing as the right to reproduce a "substantial amount" of a copyrighted work without permission or compensation, while the Conference of Directors and Principals of Quebec Universities says that the proposed exception does not mean in any way the end of compensation for creators.

Let us resolve this issue: it is open ended, free and without permission, as long as it is fair. This one and only restriction to the free use of any given material for educational purposes does not protect the book industry in any way. A definition of what is meant by "fair use" in an educational context must be included in the act.

The courts are going to have to establish what constitutes fair use. The destabilization of legitimate, well-established business models and the cost of undue litigation will compromise medium and long-term investments so long as the courts of law have not handed down decisions on what constitutes a fair or unfair practice, unless these are well defined in the act.

In the absence of a precise definition in the law, the Supreme Court developed a non-exhaustive list of six factors to assist in determining whether a use is fair: purpose, character and amount of the use, alternatives to the dealing, nature of the work and effect of the dealing on the work's market.

The problem, however, is that the court ruled that the effect of the dealing on the market of the copyright owner is neither the only nor the most important factor that a court must consider in deciding if the dealing is fair.

In contrast, in the fair use regime of the United States, this factor is the most important, and is indeed the central factor — which gives American publishers the comfort they need to invest in innovative educational research and development.

If Bill C-11 passes as it stands, Canadian publishers and foreign investors would not have the same comfort level. This is why the second most important thing to do to improve our law would be to make sure the three-step test of the Berne Convention is incorporated into our legislation so as to become the basis on which courts will rely for the interpretation of fair dealing. This would among other things ensure that the effect of the use on the work would be prioritized in the determination of what is fair, and by the same token, ensure our copyright law meets our international obligations.

Véronyque Roy, Lawyer, Legal Counsel, Union des écrivaines et des écrivains québécois (UNEQ): Honourable senators, thank you for your invitation. My name is Véronyque Roy, I am a lawyer and legal counsel of the Union des écrivaines et des écrivains québécois; I represent them here today.

The Union des écrivaines et des écrivains québécois is a professional association which was created on March 21, 1977 by about 50 writers. It now has more than 1,400 members, writers, poets, novelists, playwrights, essayists, writers who write for children and youth, and authors of scientific works. The UNEQ works to promote and distribute Quebec literature in Quebec, Canada and abroad, and defends the socio-economic rights of writers.

Our objective is to submit our position to you. The UNEQ is recognized by provincial act S-32.01, the Act respecting the professional status of artists, and certified by the Canadian Artists and Producers Professional Relations Tribunal.

In summary, Bill C-11 is attempting, we are told, to balance the rights of authors and the interests of consumers. You have heard this discussed in various ways this morning. In fact, in our opinion, the effect of this bill will be to unjustly deprive creators of their income. Writers are particularly affected because they provide the raw material of the educational system, and according to our interpretation of the exceptions the bill seeks to introduce, the government is attempting to provide free access to that raw material.

What is even more serious is that the many exceptions proposed in Bill C-11 make several uses that are currently managed by collectives free, as you heard from our colleagues, among others the COPIBEC. These collectives have proven their value over a number of years now, and have ensured access to content without creating barriers for the users, while guaranteeing some income to the creators. It seems to us that collective management allows for precisely that balance the government says it wants to ensure with its new bill, whereas the many exceptions it introduces will be eliminating that balance completely.

In other words, C-11, rather than defending the author against illicit uses of his or her work, that is to say non-remunerated uses, uses that violate its integrity from the standpoint of moral law, legalizes those uses and forces the rights holders to use technological safeguards to prevent a pillaging of their work.

[English]

The Chair: May I interject and just ask you to speak a little more slowly, please. Thank you.

Ms. Roy: No problem.

[Translation]

This reversal is both indefensible and dangerous, in our opinion, because the litigation it will generate will mortgage the future of the Canadian cultural industry for years to come, as one of our colleagues pointed out when the previous panel testified.

Here are the three points that appear to be the most problematic to us; some of them were discussed previously. We feel that the first point that poses a problem for writers specifically is clause 29, concerning, as our colleagues said, the fair use of works in educational settings, and also in satire and parody.

Literary works are most likely to circulate in the educational environment, and consequently that represents an important source of revenue for authors and writers. It is thus essential that the true value of the contribution made by creators to the education of Canadians, to the training of their imagination, to the acquisition of their knowledge, be recognized as being on the same footing as the work of teachers and other staff in educational institutions. It is unacceptable that this bill is considering depriving creators of the fair remuneration they deserve, although their works are the raw material of education.

Finally, let me specify that the exception for education mentioned in several provisions in this bill, and the conditions that would govern it, are most often vague, and set standards that will be very hard to enforce.

Moreover, the damages that accompany these new exceptions will not encourage the rights holders to take action when their rights are breached.

Regarding satire and parody, a new exception included in clause 29, the UNEQ is very concerned by the very broad scope of the concepts of satire and parody. Satire and parody certainly have their place in a democratic society in which freedom of expression is one of the cornerstones. But the UNEQ believes nevertheless that regarding the works that could be the subject of satire or parody, the moral law that underpins this act does not provide adequate protection.

That is why the UNEQ feels that the clause dealing with fair use for purposes of satire or parody should include a limit on the part of the work that can be used for these purposes. That limit should require that the satire or parody be sufficiently different from the original work, and that it not simply be an adaptation of it. Currently, under the act that is in effect, the rights holder has to be asked for permission for an adaptation to be done, and then a license is granted and a fee is paid.

Under the new exception, there are reasons to believe that adaptations could be drafted without requesting prior authorization, without remuneration, thus violating moral law, and all of this would be due to the broadening of the exceptions.

The second point we wish to raise concerns clause 29.21, the exception for content generated by users. Clause 29.21 aims to legalize the use of content protected by users who wish to use it, or modify it, so as to create a new work, to be distributed digitally without profit.

The government's will to recognize a practice that is increasingly widespread, in particular on sites such as YouTube, completely ignores the concept of moral law. Indeed, much content generated by users warps and betrays the spirit of the works that are used, a fact that the mere mention of the source cannot repair. Such an exception eliminates an author's right to preserve the integrity of his work, which is the basis for moral rights.

For instance, take the very widespread phenomenon of fanfiction, where readers who like a work appropriate the universe of its author. Under these new exceptions, there is reason to believe that the fans would have more latitude and could of course pay tribute to the authors through the new work they would generate, but they can also interfere with the characters that were created by the author originally, warp them and give them intentions they would never have had.

In fact, you know that writers are normally, or often, constrained by their contracts with their publishers in the use they make of their characters. However, under the new exception, there are reasons to believe that their fans would ultimately have more rights in the use made of the characters than the authors themselves, who are restricted by their contracts.

Our third and last point concerns the fees for private copies. You heard about this in connection with music, but this also affects authors, writers. In fact, clauses 79, 80, 81 and 82 concern the fact that fees will not be extended to private copies using new electronic supports such as digital memory devices, among others. This contradicts one of the objectives of Bill C-11, which was to modernize the act.

Under the Copyright Act, writers' works are put to many digital uses. So if a system of fees for private copies like the one that exists for music were put in place for everything relating to digital supports for written works, writers could then have their fair share.

In conclusion, we believe that the new bill destroys the public education work which has been done over the past few years to raise the awareness of the public regarding the importance of obtaining authorizations and paying fees to creators. This will deal a severe blow to the already fragile financial health of writers and artists generally. I thank you for your attention.

Senator Hervieux-Payette: Thank you for being here today to give us insight into Bill C-11. There is a lot to cover.

My question may be more suited to Ms. Roy. One of our first witnesses this morning told us that because of the procedural straightjacket we are in, we cannot legislate this matter. Do you see some regulatory way that would at least make it possible to restrict or define certain terms so we could finally get off on the right foot?

Ms. Roy: The definitions do indeed cause many problems. We believe that clarifying terminology through the regulations is the preferred approach because, in our view, the only other option for clarifying terminology is through the courts, which is a very costly undertaking for everyone.

Senator Hervieux-Payette: Each and every one of you represents primarily the interests of Quebec authors, so mostly francophones. Do your counterparts in English Canada share your views? Do you have discussions with them? Mr. Bouchard?

Mr. Bouchard: I am in regular contact with Greg Nordal of Nelson Education. Mr. Nordal is on the Access Copyright board of directors. Mr. Prieur is in regular contact with the other Canadian publishers associations, and everyone sees the same risk in the bill.

Senator Hervieux-Payette: Is the material produced by publishers, francophones and anglophones alike, better protected abroad?

How does the collection of royalties work when you market a novel versus a more scientific work? If that work is distributed for English Canada to the United States or for Quebecers in France, does Canadian law provide for the payment of royalties to our creators? Will they receive the same protection and the same royalties as they would in France?

Basically, I would like to know whether their income will decrease when they leave Canada.

Mr. Prieur: That is a fascinating question because the reality, as things currently stand — and Ms. Roy will correct me if I am wrong — when it comes to royalties paid by collectives, under Bill C-11, our authors and publishers would be better protected outside Canada than they would inside Canada.

This bill is seen as a rather direct attack on the principle of collectives, how copyright licensing bodies, like Access Copyright or COPIBEC in Quebec, operate. However, they would continue to collect the same royalties from outside the country that they do now. They will be better protected abroad than they are here.

Ms. Roy: As one witness in the previous panel put it, this is the national treatment. So when you are in another country, our law applies. Canadian users, then, receive certain exceptions under Canadian law, whereas abroad, the national law applies.

International treaties were aimed at addressing that very issue, standardizing a minimum level of protection. But as others have already pointed out, since the bill, with its exceptions, falls short of the international criteria, in our opinion, we believe it will be a problem, even from a political standpoint.

Senator Hervieux-Payette: We heard from the minister yesterday, and he did not seem to take these concerns too seriously. He said that the government was being compliant with all international conventions, that our authors would not lose any revenue. He did not mention organizations like yours.

I would not say that your survival is totally hanging in the balance, but I would say that of your clients, the authors, is.

Ms. Roy: As for UNEQ, we are not a collecting body like COPIBEC, but our authors, our literary writers do benefit from all the money managed by COPIBEC and others.

I do not know the figures for literary writers specifically off hand, but if we consider the segment of our members who are playwrights — so publishing playwrights — their average income from their artistic works is $5,000 a year right now. The amounts are quite low. If you add exceptions to that, the collectives may be in more trouble than our unions.

However, it is also important to keep in mind the professional side of the craft, since we do represent professional authors. If you consider the field of literary writing, the professional dimension will eventually disappear because the whole idea of professionalism will become somewhat muddled and pointless to future authors.

Senator Hervieux-Payette: The play Les belles-sœurs is running in Paris right now. If that play is put on right now or immediately after the bill is passed in Canada and is presented in Paris, will that lower the copyright fees paid to Michel Tremblay?

Ms. Roy: Professionally speaking, I do not think anything would change because there is a contract in place: a contract was concluded directly between the producer, who wants to run the play, and the rights holder, Michel Tremblay and his representatives.

Where you really see problems is in the educational sector. So if you take the example of Michel Tremblay, his annual income will most certainly drop, not in the professional realm but in the amateur realm, as far as education goes.

Before, if someone were to adapt one of Tremblay's plays, they would be required to ask for permission so that his characters could not be misrepresented and the person would have to pay a royalty. Under the new exceptions, for satire and parody for example, someone could alter certain elements because they considered the work to be a satire or parody and they would be able to make that argument. There is neither a definition, nor a percentage limit, so someone can take the text and use it in a different context without having to pay the royalties, even in the professional realm.

Senator Hervieux-Payette: Who ultimately stands to benefit? Between you and me, there is someone taking advantage of that, someone who profits. University deans are not going to make more money because they stop paying royalties.

So who is the big winner in all this? I see a big loser, the author, but I do not see who stands to make a lot of money.

We are not talking about billions of dollars or even many millions, but this money is significant to creators. Who will benefit from this? Who would want to be so stingy with our creators, if I may put it in those terms?

Mr. Bouchard: I would say that you are right and that there is another risk as I see it. Michel Tremblay is an extensively studied author in our educational institutions; one of his works could be copied without compensation or permission for use in the classroom. That represents a loss of income for him and a loss of potential income for the publisher. That goes for anyone who publishes literature.

When a work is selected for classroom study, it has a big impact on the company's bottom line. A textbook publisher like mine, Modulo and Nelson Education, could have its works copied rather than purchased. And that means a sharp drop in their return on investment. It costs between a million and a million and a half dollars to produce an educational support. We have to buy the rights to use photos and texts. Mr. Tremblay is part of many of our documents. So there is a potential loss of income there. There is a risk that people will stop investing and we will have to resort to using foreign works, textbooks made elsewhere.

[English]

Senator Moore: Mr. Bouchard, in your opening statement you said something that I did not quite get. You said something about one half of 1 per cent, and I do not know if it was fees that go to the writers or what it was. What do those numbers apply to?

Mr. Bouchard: This is referring to the question of Senator Hervieux-Payette, which was who is winning with the exception. Currently, our educational system in Canada is spending one half of 1 per cent of the total spent in one year. That total amount is $70 million.

Senator Moore: Is the one half of 1 per cent what the creators are getting, or the $70 million? Is that what you are saying?

[Translation]

Mr. Bouchard: I will continue in French. There is the revenue for the fees that are collected, but there is the risk of not selling the work. If it can be copied, even partially, without payment or permission, why buy the original work?

You could just use copies of a novel, for instance, and never have to compensate the author or publisher. It is even easier with textbooks. A geography textbook is a geography textbook, so you can copy parts and use them without buying another textbook. That is a risk. That is also a risk to the quality of education provided to our youth.

If we give students partial copies, and not the entire work, in underprivileged areas, for example, areas where parents do not speak the language, if children do not have a textbook to bring home, they will have trouble doing their work and passing their classes.

[English]

Senator Moore: I am very interested in your remarks, Ms. Roy, with regard to moral rights. I want you to explain to the committee and to the public what that means. You also mentioned that a satirist, a comedian, could take a work and rework it and undermine the nature of the work. That would be disastrous for a serious writer. Please tell us what you mean by moral rights and this matter of undermining the nature of a work.

[Translation]

Ms. Roy: Right now, moral rights, in and of themselves, are not changing in the legislation. They include the right to authorship — so the right to see one's name associated with one's work — and the right to the integrity of the work, so the right not to have one's work altered without one's permission, to the extent that it would not harm one's reputation.

Small changes are already allowed. If a change does not affect the reputation, it is allowed because our moral law is flexible so that people can function. But the addition of satire and parody suggests that you can go beyond moral rights, and consider a work to be a satire or a parody and alter it without permission, legally damaging the reputation in question by altering characters or their essence.

Imagine if someone were to take an idealistic and upstanding character and turn them into a Nazi extremist; that would be a tremendous blow to moral rights.

[English]

Senator Moore: It changed the whole nature of it and the context.

[Translation]

Ms. Roy: Precisely. When you consider something to be a satire or a parody, it is necessarily understood to be linked to freedom of expression. Lawmakers may have seen that as an underlying reason for adding that aspect, we are not sure. But regardless, what really worries us is that this undefined category — satire and parody — will be so open to interpretation that even a work not traditionally or normally considered satirical or parodic, would be considered as such. Consequently, it would be possible to get around copyrights and the need to ask for permission.

[English]

Senator Tkachuk: Again, there are all of these things that were talked about, just like with the previous group, but what is it exactly that you are losing here? You are talking about textbooks. What will change on the purchase of that textbook by the student, or by the professor who recommends the textbook? What is it that you fear? Do you fear that they will make copies of a couple of chapters? What is it that you fear here? That will cause a drop in revenue.

Mr. Bouchard: That is exactly what you are mentioning.

[Translation]

Our fear is that people will buy copies of the resource. Copies will be made for use in the classroom and for distribution. Using whiteboards, you can reproduce something digitally for projection. Then you can include that copy in a digital course pack, send it out to students without any payment to the author or the publisher who developed the resource in the first place.

[English]

Senator Tkachuk: Are you talking about a digital book or an actual paper book?

[Translation]

Mr. Bouchard: I am talking about a physical book because digital locks cannot protect it. It is incredibly easy to convert a book from paper form into digital form using a cheap printer from Staples.

[English]

Senator Tkachuk: A professor buys a textbook of 200 pages or 300 pages. Will he make copies for all his students? Is that what you think he or she will do?

[Translation]

Mr. Bouchard: Yes.

[English]

Senator Tkachuk: Would that not be breaking the law?

[Translation]

Mr. Bouchard: Yes.

[English]

Senator Tkachuk: What is the problem then? What is the issue? I do not know what would happen, but that person would be breaking the law.

[Translation]

Mr. Bouchard: In the legislation, as it stands now, the definition of fair dealing as it applies to education is open. Earlier, I was saying that the Canadian Association of University Teachers considers reproducing a substantial amount of a work to be fair dealing in education.

[English]

Senator Tkachuk: Do you think the courts would interpret it that way? Do you know for sure? That is what they think, but that is not what you think. I think that is wrong too. If you copied substantial portions you could be prosecuted under the law.

[Translation]

Mr. Bouchard: Right now, the law does not provide a definition. In the CCH decision, the court did not consider the act of hurting the sale of a textbook to necessarily be a violation of fair dealing, or the result of an unfair reproduction. So there is currently a precedent in Canada.

[English]

Senator Tkachuk: The Supreme Court did not say that you could make copies of a book and hand it out to your students, breaking the copyright law. They said that if someone copied a couple of pages to share with someone that would be fair use. The Supreme Court did not give exemption for the illegal act of making copies of books, which would be a huge task at any rate, and someone would have to pay for it. I cannot imagine a professor making 20 or 30 copies of a book.

Why would they break the law by doing that?

[Translation]

Mr. Bouchard: The Supreme Court ruling stated that harming the economic model of a work is not reason enough to prohibit its reproduction. Then, the Canadian Association of University Teachers claimed that fair dealing in education is reproducing a substantial amount of a work.

We also have an assessment from the Quebec bar stating that the law does not provide sufficient clarification on what constitutes fair dealing as it applies to education. The matter will have to be decided by the courts, entailing a very long, costly and complicated process.

[English]

Senator Tkachuk: I do not buy his argument, chair, but it was interesting to listen to.

Senator Harb: Thank you very much for your presentation. It seems to focus on one word only, and that is "education." You say that in France they removed "textbook," and you cannot reproduce them there.

It strikes me that the issue is not as much in the legislation as it is in the application of the law. Would you agree with that? It is fair dealing, as Senator Tkachuk was mentioning. If a teacher copies one or two pages of a 400-page-book for a class, that is fair dealing. However, if I copy the whole book, that is a completely different animal. That is not fair dealing. As the senator was saying, that is cranking up the machine.

[Translation]

Mr. Bouchard: As an author, as a university teacher, if I spent two years working on a resource for the classroom, it is no more unfair to compensate me for the reproduction of two pages. If the work was created, why should it be used without payment to the author? That escapes me completely.

Mr. Prieur: There is something else to keep in mind here: we are talking about printed books. What is new right now is the digital education aspect. We all know that if you have an e-book in your possession, it is much easier to pass it on to people. You do not need to recopy it. You could even scan a book and make it available to anyone you wished. Today, we are in a digital age that makes it increasingly easy to pass on knowledge without the ability to control how that knowledge is transferred.

In the case of education, two principles are at play. One is the principle of royalties that licensing bodies collect from education ministries, universities and colleges, for the use of supports, books. Authors are compensated accordingly. The second principle has to do with the books that are purchased and handed out to students. Quebec's Education Act stipulates that one textbook is purchased per student per subject at the elementary and high school levels. But it is important to consider the current context, where it is possible to make small quantities of all those books available, a practice that deprives producers of revenue. Textbook publishers are the ones who help pay for the research and development necessary to put a textbook together. They will end up with very little revenue coming in because very little will be acquired and very little will be used. You have to put this in the context of the digital age. That is the rub in this bill.

[English]

Senator Harb: In my view, there is a bit of overreaction here. The current law talks about fair dealing for the purpose of research or private studies. The present law clearly says that it does not infringe on copyright. The only addition is the word "education," and it still talks about fair dealing.

How is copying one page out of 300 unfair?

[Translation]

Mr. Prieur: First off, I do not want to play word games; the first order of business must be defining the word "education". The legislation does not make that clear. What does "for the purpose of [. . .] education" mean? Does that include a private lesson? Driver's training? Many things in this bill are wide open to interpretation. Copying a single line or page is not what we object to. That is not the issue. The issue is the entire work. When university teachers use the phrase "a substantial amount of a copyrighted work", how would you define that?

Senator Harb: I understand now.

Ms. Roy: Section 3 of the current Copyright Act stipulates that the author's control, or monopoly, over the work applies to a "substantial part" of that work. That is not changing. The exception listed in section 29 states that a person can reproduce a substantial part of a work for the purpose of research or private study. The reference should indeed appear.

But the addition of the word "education" to the fair dealing exception means that a person can reproduce a substantial part for the purpose of "education" without permission. That is what will happen. That is why the exception is much too broad. There is already a good system in place. Collectives make life easy for universities and schools. All the right things are already in place. So that is where publishers and authors are really losing out: they will no longer receive the payments that they were previously owed.

The other point I wanted to make has to do with not having a precise definition of the term "education". When we think of the word "education", the school environment is what immediately comes to mind. Fine. What about a parent who starts copying library books to build their own little library for their own use? On top of that, you have the digital exceptions that allow users to disseminate digital works. Does that fall under the "education" category? If it is children's books, does that come under "education" too? That is the question being asked, and we have yet to receive an answer.

Senator Harb: There are two considerations here: the law and enforcement of the law. Let us look at the law: if a teacher wants to reproduce one or two pages out of a book, that would be considered fair dealing. You have no issue with that.

Ms. Roy: There are collectives that handle that.

Senator Harb: If I were in your shoes, and this is my opinion, I would seize this opportunity. As soon as this bill is passed, either with or without amendments, I would sit down with the authority responsible for putting together the regulatory regime. That is the time to dot the i's and cross the t's. That is the time to define "fair dealing" as it pertains to education. Would that work?

Ms. Roy: Yes, of course. We would be happy to contribute to that discussion.

[English]

The Chair: That concludes round one of our questions. I have one question in round two. Senator Tkachuk, please.

Senator Tkachuk: What do you do now? If a professor wants to run off a few pages and hand it out to his students, what do you do now?

[Translation]

Mr. Bouchard: Schools, school boards and ministries of education across the country pay collectives such as Access Copyright and COPIBEC a certain amount per student enrolled in the school system. That way, anytime a work is copied or recorded, the payments collected by licensing bodies are redistributed to the rights holders.

When you copy 1 or 2 pages out of 300, fair dealing dictates that you compensate the person who worked on those 2 pages. If their content is a useful teaching aid in the classroom, so too is the work done by the author. It is only fair to compensate the author. That happens now thanks to the network of collectives.

[English]

Senator Tkachuk: The collective now gets a cheque from the education department of a province saying, in the instance where a few copies will be made, "Here is a cheque. Pay your writers or publishing companies." That is what happens now. With this bill, what will happen? Will you still get the cheque, or will you no longer get the cheque? Do you have to go to the university to get the cheque?

[Translation]

Mr. Bouchard: Universities withdrew from Access Copyright because of Bill C-11. Now the rights applicable to education involve fair dealing. There is no longer a need to pay. Universities have withdrawn and are already using the material. The bill has not even been passed yet, and already we are seeing —

[English]

Senator Tkachuk: The Supreme Court says they can.

Senator Moore: Not quite.

Senator Tkachuk: The Supreme Court says they can use the material.

Senator Moore: Not quite.

Senator Tkachuk: I am just asking. If they are using it now and the bill is not yet in force, there is nothing stopping them from doing it now.

[Translation]

Ms. Roy: The Supreme Court did not consider the matter as it pertained to education. The Supreme Court examined the issue in terms of research and study. It was with that context in mind that the court came to its ruling.

[English]

Senator Tkachuk: I just find the idea that the universities would steal books is implausible, so I do not share the concerns that you have. If they do, then we have a bigger problem in society than just this particular law. That is for sure.

The Chair: Thank you, Senator Tkachuk. We have one final question from Senator Moore.

Senator Moore: Thank you, chair.

We have heard many people mention here yesterday and today about this whole issue may be headed toward the courts.

I read section 29. It is very short, but always the smallest things are the biggest things. Fair dealing for the purpose of research, private study, education, parody or satire does not infringe copyright. Then you go to the Supreme Court of Canada and the CCH case. The following factors help decide whether a dealing is fair: purpose of the dealing, education, character of the dealing, the amount of the dealing, so one page versus your whole textbook, and nature of the work, which gets to the parody. We have serious books, and somebody could take it and try to make a joke of it without having to consult the writer and without compensating and change the whole nature. There is available alternatives to the dealing and the effect of the dealing on the work, which goes right to the parody example you have mentioned. This is going to end up in the courts unless we can fix it somehow in our regulations.

The Chair: Thank you, sir. That concludes our questions to all of our witnesses.

Senator Tkachuk: Very interesting.

The Chair: I express on behalf of all members of the committee our gratefulness thanks for your appearance today. You have been very helpful in our deliberations.

(The committee adjourned.)