Canada’s Copyright Modernization Act: A Law With Global Impacts
November 12, 2012
Canada is home to many adult website operators, and a large consumer market. While developments in U.S. copyright law have been at the forefront of late, recent dramatic changes in Canadian copyright law are also of significant importance and may provide a blueprint for future modifications in U.S. law.
This past summer, in the country’s fourth attempt to amend its copyright laws since 2005, lawmakers finalized the new Canadian legislation, which substantially alters global copyright enforcement procedures – particularly in the online realm. In a blatant effort to rid the country of the reputation that garnered its placement on piracy watch lists across the globe, Canada has now done a complete one-eighty with its cutting-edge Copyright Modernization Act. Specifically drafted to parallel WIPO protocol, the Act pledges to assist Canada in becoming a major player in the global marketplace’s digital economy by striking the perfect balance between the rights of copyright holders and the public. Or so they say…
Admirably, the Act broadly expands the Canadian legal concept of “Fair Dealing.” Fair Dealing – comparable to America’s “fair use” – allows certain non-rights holders to use copyrighted material under specific circumstances, as long as the use doesn’t threaten the interest of the copyright holder. Previous copyright law limited Fair Dealing to: 1) research; 2) private study; 3) news reporting; 4) criticism; and 5) review. In a nod to free speech, the new Act extends the Fair Dealing umbrella to educational purposes, parody and satire. The hitch? To fall within Fair Dealing application, the nature of the use must be entirely non-commercial.
With the serious limitations resulting from the non-commercial requirement for Fair Dealing, Canadian lawmakers recognized the need to appease the country’s technology-based businesses that often rely on incidental use of copyrighted materials. While many companies involved in the tech industry are copyright owners, a complex web of quid pro quo licensing, sublicensing, and assignment drives the evolution of technological advancement in online entertainment. Accordingly, in the name of fostering innovation, the Act clarifies that automatic, technical and incidental reproductions are not a copyright violation. This means that many businesses which rely on copyrighted works as a supplement to a process, are most likely no longer impeded by the need to obtain express permission for a minuscule use of a copyrighted work during research and development. Software companies, specifically, will now be permitted to freely engage in research involving encryption, security testing and reverse engineering without fear of ramifications that may arise from incidental use of copyrighted works. Another business feeling a weight lifted off its shoulders is the fledgling broadcasting industry. In the past, broadcasters in Canada – like most countries – had to pay copyright holders for any temporary copies made of music that would be played on the air in addition to payment for actually broadcasting the music. Because of their temporary nature, broadcasters no longer have to pay for the creation and use of such copies as long as they are retained for less than thirty days.
Although the Act touts equality for all those involved in the digital marketplace, it significantly shifts the legal power dynamic in favor of copyright owners. Copyright holders not only have more intimidating remedies in pursuing infringers, they too, get to experience an expansion of their rights as a whole. The Act promises the utmost enforcement of: 1) Moral Rights; 2) Distribution Rights; and 3) Making-Available Rights. The traditionally European concept of Moral Rights allows the copyright holder to protect the “integrity” of the work for up to fifty years after publication, and was incorporated into the Act as a parallel to WIPO’s international notions. Distribution Rights will allow owners to control the first sale of copies, and hopefully curb preemptive leaks and distribution of pirated works. Finally, in taking a stance against peer-to-peer file sharing sites, the Act introduces Making-Available Rights that allow the author to control how their work may be accessed in cyberspace. Granted, some of these rights aren’t exactly new to the copyright game, but Canada is one of the first jurisdictions to put it all in one comprehensive piece of legislation.
Then there’s the latest and greatest “notice and notice” regime; a process that will undoubtedly impact online service providers for years to come. In the past, copyright owners had the right to seek a court order demanding that access to online infringing material be blocked. However, under the Act’s “notice and notice” regime, the onus to protect one’s copyright is no longer on the rights holder – it’s on the notified service provider. ISPs are now obligated to proactively discourage any use of a website or online service that could be considered infringing, by acting as a liaison between copyright owners and ISP’s customers. Service providers are required to forward any notice they receive from a copyright owner to their customer, if the rights holder alleges the customer is engaging in infringing activities. Not only are ISPs required to retain detailed records of such notifications, they are even subject to penalties for noncompliance as an “enabler” of infringement. With the not-so-affectionately dubbed ‘enabler provision,’ Canada is one of the few jurisdictions in the world to specifically provide a civil remedy for copyright owners against online intermediaries who “willfully and knowingly enable” copyright infringement. The ‘enabler provision’ is intended to supplement the already expanded rights of copyright owners discussed above. Claiming that many sites veil their piracy by claiming they are simply a platform for user-generated content, lawmakers maintain that legitimate ISPs have nothing to fear as they are exempt from ‘enabler’ liability if their activities are restricted to that of a true intermediary (e.g. – caching and hosting).
If you’re wondering why some of this sounds a bit familiar, that’s because it should… Remember SOPA? The legislation, once dubbed “the killer of the Internet,” was abandoned last spring after millions of Americans cried foul in an unprecedented rallying against a web-regulating law. Apparently Canadians didn’t feel quite the same way… Despite the legislature’s supposed intention of confining the law’s application to piracy-driven websites, the Act’s ‘enabler’ liability could unintentionally encompass legitimate websites or online services like forums, dating sites, classified advertising sites, or indexing sites. Arguably, the same broad language is what ultimately killed SOPA. Cyberspace has evolved almost completely to a Web 2.0 world, chock full of user-generated content as far as the eye can see. Unfortunately for those UGC sites (e.g. – YouTube, social media, etc.), the very core of their business models can be alleged to “enable” copyright infringement, when their services are misused by infringers. This obviously has a grave impact on Canadian-based websites, considering the non-commercial limitation on the country’s Fair Dealing rights. But as we’ve seen with U.S. copyright laws, the Canadian equivalent may potentially apply to all websites available in Canada, regardless of their jurisdiction of origin. Therefore, website operators throughout the world should educate themselves regarding the new obligations and rights provided by this landmark Canadian legislation.
The evolution of the Internet continues to confront legal restrictions imposed by numerous countries, passed in an attempt to balance technological advancement with protection of artistic expression. The substantial developments in Canadian copyright law signals big changes on the horizon, as each nation grabbles with these vexing legal issues. While online communication can only be effectively regulated by a global authority that does not yet exist, the rights of webmasters and copyright holders will be significantly impacted by technology regulation such as Canada’s Copyright Modernization Act.
Note: On November 7, 2012, most of the Canadian Copyright Modernization Act went into effect, upon publication of a government proclamation order. Notably absent from the order were the provisions addressing the controversial “notice and notice” regime. Although the Canadian government has yet to delve into much detail regarding the exclusion, rumors of “fierce behind-the-scenes lobbying” over the logistical details of the regime has made it clear that further policy development is needed before that controversial new system can take effect.
Lawrence G. Walters heads up Walters Law Group, www.FirstAmendment.com; a law firm focusing on First Amendment, Internet and Intellectual Property Law. Mr. Walters represents clients located throughout the United States, Europe, and Canada, on federal and international law issues. Nothing in this post is intended as legal advice, but is provided solely as general legal information.