1

Understanding Bill C-32 Copyright Modernization Act – Fair

Dealing and Related New Exceptions

November 17, 2010

barry b. sookmanbsookman@mccarthy.ca416-601-7949

9819317

2

Overview of Presentation

• Sections of Bill C-32 that will be covered:

• New fair dealing exceptions (s.29)

• New private use exceptions (s.29.21-29.24)

• User generated content exception

• Format shifting exception

• Time shifting exception

• Back-up exceptions

• New exceptions to foster “innovation” (30.61-63)

• Computer program interoperability

• Encryption research

• Computer and network security assessment

• Temporary reproductions for technological processes (30.71)

3

Fair Dealing Exceptions

s.29 Fair dealing for the purpose of research, private study, education, parody or satire does not infringe copyright.

Industry Canada Fact Sheet: Fair dealing for parody and satire: The new bill enables the use of copyrighted materials to create a parody or satire, provided the use is considered "fair.”

Industry Canada Fact Sheet: “Fair dealing for education: The new bill enables the use of copyrighted materials for the purpose of education, provided the use is "fair" (i.e., it does not harm the market for a work). (emphasis added)

Industry Canada Backgrounder: “The bill includes an extension of the change to the provisions for fair dealing that will enable the use of copyrighted materials for the purpose of education in a structured context, provided the use does not harm the legitimate interests of the copyright owner and appropriate measures have been adopted to prevent abuse, as required.” (emphasis added)

4

New exceptions for individuals (s.29.21-24)

5

User Generated Content (UGC)Industry Canada Fact Sheet: “The new bill permits the use of legitimately acquired material in user-generated content created for non-commercial purposes. This applies only to creations that do not affect the market for the original material. Examples include making a home video of a friend or family member dancing to a popular song and posting it online, or creating a "mash-up" of video clips.”

29.21(1) It is not an infringement of copyright for an individual to use an existing work or other subject-matter or copy of one, which has been published or otherwise made available to the public, in the creation of a new work or other subject-matter in which copyright subsists and for the individual — or, with the individual’s authorization, a member of their household — to use the new work or other subject-matter or to authorize an intermediary to disseminate it, if

(a) the use of, or the authorization to disseminate, the new work or other subject-matter is done solely for non-commercial purposes;

(b) the source — and, if given in the source, the name of the author, performer, maker or broadcaster — of the existing work or other subject-matter or copy of it are mentioned, if it is reasonable in the circumstances to do so;

(c) the individual had reasonable grounds to believe that the existing work or other subject-matter or copy of it, as the case may be, was not infringing copyright; and

(d) the use of, or the authorization to disseminate, the new work or other subject-matter does not have a substantial adverse effect, financial or otherwise, on the exploitation or potential exploitation of the existing work or other subject-matter — or copy of it — or on an existing or potential market for it, including that the new work or other subject-matter is not a substitute for the existing one.

6

User Generated Content (UGC)

• Does the exception violate the Berne Convention, TRIPs, the WCT and WPPT?

• Is exception without international precedent?• Does section permit very substantial copying a work? • The only condition placed upon the individual is that these “existing

works” be used in the creation of a new work. Could a new work be a “collective work” or “compilation” of works such as “the best” of a TV series or artists’ works?

• Is there any requirement that the new work be transformative or that the copying be limited in extent or be fair?

• Does the exception negate the exclusive right to make derivative works or undermine moral rights in a work?

7

Could the UGC exception enable individuals to create “compilations” or “collective works” of existing works (or other UGC works) and to have them streamed or downloaded over public networks?

User-Generated Content Exception (s.29.21) conditions:• Done for non-commercial purposes• Source of work is mentioned• Non-infringing source material• Use of work does not have

substantial adverse effect on market of source material (individually)

TOP 100 FAVORITE PC GAMES

8

Could the UGC exception undermine an artist’s right to authorize the creation and dissemination of derivative works (sequels, adaptations, translations, abridgements, etc.)?

Jurassic Park

The M ovie!!

(unauthorized

non-

com m ercial

m ovie)

Jurassic Park

The Movie!!

(unauthorized non-commercial movie)

HARRY POTTER

Book 8(unauthorized

sequel)

User-Generated Content Exception (s.29.21) conditions:• Done for non-commercial purposes• Source of work is mentioned• Non-infringing source material• Use of work does not have

substantial adverse effect on market of source material (individually)

The (non-infringing) works could then be legally hosted and downloaded or streamed, or shared over p2p networks .Unauthorized audio-book

with commentary

SEINFELD

ALTERNATE UNOFFICIAL

ENDING

9

Could the UGC exception be used to copy large commercial and non-commercial websites to offer free non-commercial services based on those websites?

User-Generated Content Exception (s.29.21) conditions:• Done for non-commercial purposes• Source of work is mentioned• Non-infringing source material• Use of work does not have substantial adverse effect

on market of source material

Website user could copy entire contents of websites including html code, graphics and entire content. With selection, arrangement or other original modifications to the site the user could create and publish a new website for non-commercial purposes e.g. non-profit auction or travel service; rival blog etc.

10

Could the UGC exception undermine software licensing

including open source licensing models?

Under UGC exception, software developers could make modification to open source software and distribute these without respecting the licensing terms and without infringing copyright. Copyleft open-source licenses often require modifications that are published in executable format also publish the source code of the modification. The UGC exception would allow publication and distribution of open source code without adhering to open source licensing conditions thus undermining use of copyright to protect open source licensing models. See, Jacobsen v. Katzer 535 F.3d 1373 (Fed. Cir. 2008)

User-Generated Content Exception (s.29.21) conditions:• Done for non-commercial purposes• Source of work is mentioned• Non-infringing source material• Use of work does not have substantial adverse effect on

market of source material (source material is free)

11

Format Shifting (s.29.22)

Industry Canada FAQ: “The bill will allow "format shifting." Consumers will be able to copy legally acquired music onto devices that they own, provided that it is for private, non-commercial purposes and does not break a digital lock.

29.22 (1) It is not an infringement of copyright for an individual to reproduce a work or other subject-matter or any substantial part of a work or other subject-matter if(a) the copy of the work or other subject-matter from which the reproduction is made is not an infringing copy;(b) the individual legally obtained the copy of the work or other subject-matter from which the reproduction is made, other than by borrowing it or renting it, and owns or is authorized to use the medium or device on which it is reproduced;(c) the individual, in order to make the reproduction, did not circumvent, as defined in section 41, a technological protection measure, as defined in that section, or cause one to be circumvented;(d) the individual does not give the reproduction away; and(e) the reproduction is used only for private purposes.

(2) For the purposes of paragraph (1)(b), a “medium or device” includes digital memory in which a work or subject-matter may be stored for the purpose of allowing the telecommunication of the work or other subject-matter through the Internet or other digital network.

(4) Subsection (1) does not apply if the individual gives away, rents or sells the copy of the work or other subject-matter from which the reproduction is made without first destroying all reproductions of that copy that the individual has made under that subsection.

12

• Does the new copy have to made for the individual’s own private purpose? Does the condition that a person “not give the reproduction away” prevent electronically making copies for someone else’s use?

• Reproductions can’t be made by borrowing or renting copies from someone else, but can a person give someone electronic access to his/her content e.g., their iPod, or computer to make copies?

• Why are secondary dealings with the format shifted work not expressly prohibited as they are in ss. 80(1) and 80(2) of the private coping exception?

• Can copies be made where it would conflict with an online contract?• Do people have to buy or license the source file used to make the copy?• Because the source copy is merely a copy that a person has legally obtained, does the format shifting exception also apply where a person is entitled to make copies of content under other limited exceptions e.g., private copying exception, backup copy exception, time shifting exception, UGC exception, PAM exception, and where a person has an exception which permits circumvention for specific purposes only?

13

Time shifting (s.29.23)

Industry Canada FAQ: “This bill will allow Canadians to "time shift," or record television, radio or Internet broadcasts, provided that it is done for private, non-commercial purposes. This bill does not restrict the types of devices and formats that can be used, making this exception technologically neutral.”

29.23 (1) It is not an infringement of copyright for an individual to fix a communication signal, to reproduce a work or sound recording that is being broadcast or to fix or reproduce a performer’s performance that is being broadcast, in order to record a program for the purpose of listening to or viewing it later, if

(a) the individual receives the program legally;

(b) the individual, in order to record the program, did not circumvent, as defined in section 41, a technological protection measure, as defined in that section, or cause one to be circumvented;

(c) the individual makes no more than one recording of the program;

(d) the individual keeps the recording no longer than is reasonably necessary in order to listen to or view the program at a more convenient time;

(e) the individual does not give the recording away; and

(f) the recording is used only for private purposes.

(2) Subsection (1) does not apply if the individual receives the work, performer’s performance or sound recording under an on-demand service.

(3) The following definitions apply in this section.

“broadcast” means any transmission of a work or other subject-matter by telecommunication for reception by the public, but does not include a transmission that is made solely for performance in public.

“on-demand service” means a service that allows a person to receive works, performer’s performances and sound recordings at times of their choosing.

14

The individual can make only a single recording, but can the individual make additional permanent copies?

How long can the library be retained? Does the exception permit making copies of streams obtained

through a subscription service, even if the copying is done in violation of an agreement or online license?

Can the new copy be used for private purposes other than those of the person making the copy?

15

Industry Canada Fact Sheet: “Backup copying: Allows consumers, businesses and institutions to make backup copies of legally acquired content to protect against damage or loss.”

Backup copy (s.29.24) 29.24 (1) It is not an infringement of copyright in a work or other subject-matter for a person who owns — or has a license to use — a copy of the work or subject-matter (in this section referred to as the “source copy”) to reproduce the source copy if

(a) the person does so solely for backup purposes in case the source copy is lost, damaged or otherwise rendered unusable;

(b) the source copy is to make the reproduction, did not circumvent, as defined in section 41, a technological protection measure, as defined in that section, or cause one to be circumvented; and

(d) the person does not give any of the reproductions away.

(2) If the source copy is lost, damaged or otherwise rendered unusable, one of the reproductions made under subsection (1) becomes the source copy.

(3) The person shall immediately destroy all reproductions made under subsection (1) after the person ceases to own, or to have a licence to use, the source copy.

• Is there any restriction on the uses that can be made of the copy?• The back-ups cannot be given away, but can they be lent or licensed to others for their

use?

16

Computer Programs

¬Is there an overlap with the UGC or format shifting exceptions?

¬Why have two back-up exceptions for computer programs?

17

“Innovation exceptions”

Government Backgrounder: Clear copyright rules to encourage innovation. For technology companies, the bill will include measures to enable activities related to reverse engineering for software interoperability, security testing and encryption research, including the circumvention of TPMs for these purposes.

18

Interoperability of computer programs

30.61 It is not an infringement of copyright in a computer program for a person who owns a copy of the computer program that is authorized by the owner of the copyright, or has a licence to use a copy of the computer program, to reproduce the copy for the sole purpose of obtaining information that would allow the person to make the program and any other computer program interoperable.

Article 6(1) of the EC Copyright Directive. “Decompilation 1. The authorization of the rightholder shall not be required where reproduction of the code and translation of its form within the meaning of Article 4 (a) and (b) are indispensable to obtain the information necessary to achieve the interoperability of an independently created computer program with other programs, provided that the following conditions are met: (a) these acts are performed by the licensee or by another person having a right to use a copy of a program, or on their behalf by a person authorized to do so; (b) the information necessary to achieve interoperability has not previously been readily available to the persons referred to in subparagraph (a); and (c) these acts are confined to the parts of the original program which are necessary to achieve interoperability. 2. The provisions of paragraph 1 shall not permit the information obtained through its application: (a) to be used for goals other than to achieve the interoperability of the independently created computer program; (b) to be given to others, except when necessary for the interoperability of the independently created computer program; or (c) to be used for the development, production or marketing of a computer program substantially similar in its expression, or for any other act which infringes copyright. 3. In accordance with the provisions of the Berne Convention for the protection of Literary and Artistic Works, the provisions of this Article may not be interpreted in such a way as to allow its application to be used in a manner which unreasonably prejudices the right holder's legitimate interests or conflicts with a normal exploitation of the computer program.” (emphasis added)

19

Encryption research

s.30.62 It is not an infringement of copyright for a person to reproduce a work or other subject-matter for the purposes of encryption research if(a) it would not be practical to carry out the research without making the copy;(b) the person has lawfully obtained the work or other subject-matter; and(c) the person has informed the owner of the copyright in the work or other subject-matter.

Is the section needed for “fair” encryption research?

“Research” is broadly construed and includes commercial research. CCH v. Law Society of Upper Canada, 2004 SCC 13 It includes the action “of looking or searching, effort to find something”. SOCAN v. Bell Canada, 2010 FCA 123

Could the exception be used to copy and reverse engineer encryption programs used to protect IT systems and networks and transmissions/communications made using the networks? Could the exception diminish the tools a company could use to pursue those who hack its encryption and weaken a company’s ability to protect the privacy and security of IT systems, networks and transmissions?

20

Computer and Network Security Assessment

s.30.63 It is not an infringement of copyright for a person to reproduce a work or other subject-matter for the sole purpose, with the consent of the owner or administrator of a computer, computer system or computer network, of assessing the vulnerability of the computer, system or network or of correcting any security flaws.

Is the section needed for “fair” security assessments?

Is the section limited to “ethical hacking” or does it permit any manner of “assessing the vulnerability” of devices or for correcting any security flaws”.

Could the exception enable reverse engineering of encryption systems for the purposes of hacking IT networks and systems?

Who’s consent would be needed in order to carry out the vulnerability assessment? Is this consistent with the intent of the encryption research exception?

Does the section have the potential to be misused to enable hackers to undermine security systems?

21

Temporary Reproductions for Technological Processes

s.30.71 It is not an infringement of copyright to make a reproduction of a work or other subject-matter if(a) the reproduction forms an essential part of a technological process;(b) the reproduction’s only purpose is to facilitate a use that is not an infringement of copyright; and(c) the reproduction exists only for the duration of the technological process.

Article 5 of the EU Copyright Directive

“Temporary acts of reproduction which are transient or incidental [and] an integral and essential part of a technological process and whose sole purpose is to enable: a) a transmission in a network between third parties by an intermediary, or (b) a lawful use of a work or other subject-matter to be made, and which have no independent economic significance, shall be exempted from the reproduction right provided for in Article 2.” (emphasis added)

Would the section have unintended consequences?

22

VANCOUVERSuite 1300, 777 Dunsmuir StreetP.O. Box 10424, Pacific CentreVancouver BC V7Y 1K2Tel: 604-643-7100 Fax: 604-643-7900 Toll-Free: 1-877-244-7711

CALGARYSuite 3300, 421 7th Avenue SWCalgary AB T2P 4K9Tel: 403-260-3500 Fax: 403-260-3501 Toll-Free: 1-877-244-7711

TORONTOBox 48, Suite 5300Toronto Dominion Bank TowerToronto ON M5K 1E6Tel: 416-362-1812 Fax: 416-868-0673 Toll-Free: 1-877-244-7711

OTTAWASuite 200, 440 Laurier Avenue WestOttawa ON K1R 7X6Tel: 613-238-2000 Fax: 613-563-9386 Toll-Free: 1-877-244-7711

MONTRÉALSuite 25001000 De La Gauchetière Street WestMontréal QC H3B 0A2Tel: 514-397-4100 Fax: 514-875-6246 Toll-Free: 1-877-244-7711

QUÉBECLe Complexe St-Amable1150, rue de Claire-Fontaine, 7e étageQuébec QC G1R 5G4Tel: 418-521-3000 Fax: 418-521-3099 Toll-Free: 1-877-244-7711

UNITED KINGDOM & EUROPE125 Old Broad Street, 26th FloorLondon EC2N 1ARUNITED KINGDOMTel: +44 (0)20 7489 5700 Fax: +44 (0)20 7489 5777