HERI Committee Report

MAINTAINING A SINGLE SYSTEM

Chapter 13
Copyright

A. What is Copyright?

Copyright is a property right in an original work, giving the holder (usually the creator) certain exclusive rights in relation to the work, such as the right to reproduce it, to perform it in public, or to communicate it to the public via telecommunications. It applies to all original literary, dramatic, musical and artistic works, including television and radio programs, as well as performances, sound recordings and communication signals. In Canada, these rights are protected under the federal Copyright Act.

The purpose of the Copyright Act is to protect the property rights of the creators who produce the work while promoting creativity and the orderly exchange of knowledge and information. This involves balancing the rights and interests of those who create material and those who want to publish, share or benefit from it.

In general, creators get recognition, money and the right to control how their work is used. This is intended to encourage the sharing of the material. In exchange for this, creators are obliged to allow some limited use of their material, such as "fair dealing" with the work for the purposes of private study, research, criticism, review, or news reporting. Copyright lasts for a limited period, usually the length of the creator's life, plus 50 years. After that period, the copyright expires and the work passes into the "public domain". Once a work is in the public domain, anyone can use it without charge and without fear of infringement. For example, as the author Molière (Jean-Baptiste Poquelin) has been dead for over 50 years, his works may be produced or published by anyone without paying any royalties to the creator or his heirs.

However, during the time that the work is protected by copyright, anyone who wishes to use copyrighted material in a way that is not exempted under the Copyright Act must obtain the copyright holder's authorization, and more likely than not, pay for its use. This is usually in the form of royalty payments to the copyright holder or a collective society acting on the holder's behalf. These royalty payments are either negotiated between the parties or, in specified cases, Copyright Board Canada establishes the royalties to be paid for the use of the works.

B. Telecommunications Rights

Most television broadcasters and radio stations do not create or produce the material they broadcast themselves. Rather, they acquire it from the actual creators or originators. CTV, for example, did not create the television drama The West Wing; it simply obtained permission from the copyright holder to broadcast the show to Canadian audiences over its own channel.

Telecommunication rights, therefore, represent the exclusive right copyright holders have to transmit their works to the public via telecommunications. Here, the copyright holder has opted to permit this particular Canadian television channel to broadcast this particular television show. In addition to a monetary payment, there may well be other conditions attached to the right to broadcast the show, such as time restrictions and limits on the number of times the show is broadcast.

Once a particular broadcasting undertaking has secured the exclusive right to broadcast a given work, this gives it certain rights against that same work being broadcast elsewhere. Thus, if CTV has the exclusive right to broadcast The West Wing, it will be able to enforce this right against any other broadcaster should another Canadian television channel also broadcast the show in Canada.

Although broadcasters do not own the copyright in the material they acquire and then simply broadcast, they do, however, own the copyright of the broadcast signal itself, as provided by section 24 of the Copyright Act. This is a subtle but important distinction that gains relevancy with the issue of the retransmission of broadcasts, to be discussed below.

C. Retransmission Rights

The retransmission of material is the domain of cable,
satellite — and possibly — Internet distributors. Retransmission is specifically contemplated by section 31 of the Copyright Act, which gives retransmitters such as cable and satellite distributors the right to retransmit material if they have paid the fee set by Copyright Board Canada under the compulsory licence created by the Act for retransmission purposes. In addition, the Copyright Act specifically excludes retransmitters from the definition of "broadcaster" for the purposes of the Act.

The development of the retransmission right is in part the result of perceived inequities between broadcasters and cable and satellite providers. Prior to 1990, cable and satellite providers could deliver programming and services to subscribers and charge subscribers fees for doing so without having to compensate the copyright holders for the broadcast material as broadcasters must. Cable and satellite providers were able to simply capture the broadcast signals containing the programs literally out of the air and then transmit them over their own equipment. If necessary, the signal could be relayed by equipment from place to place, thereby delivering a signal that was local to Spokane, Washington, say, to a point some distance removed, such as Edmonton. Under this system, the copyright holders of the material being broadcast were being bypassed and not receiving the payment to which they were entitled as copyright holder.

Copyright law in Canada was amended as a result of the Free Trade Agreement negotiated between the United States and Canada and effectively ended the free ride enjoyed by cable and satellite providers. Since 1990, cable and satellite providers and any others who profit from providing distant broadcast signals to customers have been required to pay for the programming they retransmit to their subscribers.¹

Under this post-1990 system, the copyright and retransmission rights holders are considered properly compensated. Accordingly, to operate legally, cable and satellite providers are now obliged to pay royalty fees set by Copyright Board Canada to collectives that represent program producers and other rights owners.

D. Compulsory Licences

In an attempt to strike a balance between individual rights holders — those who hold copyright in a particular work — and the broader interests of broadcast policy in serving the public interest, Parliament created a "compulsory licence" for the retransmission of broadcast programming. A compulsory licence is a statutorily-created mechanism that allows certain parties (such as cable companies) to use copyrighted material (such as television broadcasts) without the explicit permission of the copyright owner, provided they have made arrangements to pay royalties. These royalties are usually paid to a copyright collective that collects royalties on behalf of and distributes them to copyright owners. The royalties payable are in turn approved as tariffs by Copyright Board Canada. The compulsory licence is thus a public policy-driven exception to the general copyright principle that copyright owners have exclusive control over their works. The compulsory licence is an element of the federal Copyright Act, which, as national legislation, applies across and throughout Canada, including the civil law province of Quebec.

A witness representing the Canadian Association of Broadcasters characterized the compulsory licence as a reasonable compromise to the alternative of no payment at all.² Other witnesses, however, called for its outright abolition and replacement by a free market system in which both value and payment are negotiated between parties. For instance, some broadcasters would prefer to negotiate directly with the rights holders in an open market system rather than having to go through Copyright Board as is the current situation.³ After all, it is already the case that the majority of services and content offered by pay-per-view, specialty and pay television channels are negotiated in the open market between distributors and rights holders.⁴

E. Internet Retransmission

Innovations in technology since 1990 have presented broadcasters and retransmitters with interesting challenges, and the particular issue of transmitting television signals over the Internet ("Internet retransmission") has been the subject of considerable debate.

As noted in Chapter 3, the digital revolution has found its way onto the television and radio broadcast stage, driven in large part by the difference between digital and analog technology. Analog technology transmits information as continuously varying electrical currents or waves. Digital, on the other hand, refers to technology in which information is expressed in binary digits, referred to as "bits", transmitted in pulses or bursts rather than in a continuous wave. This has significant implications for copyright and broadcast, because once information is in digital form, it may be easily and cheaply copied or transmitted without any loss of information or quality. Consider, for example, how easily an e-mail message may be forwarded to multiple recipients, who then forward it in turn to other recipients and so on, all without any loss of information whatever.

The Internet is a digitally driven system, and its instantaneous global reach is well known. This evolution in technology also facilitated our ability to transmit or "stream" broadcast material over the Internet, thereby allowing computer owners to view television programs on their personal computers. This, in turn, raises serious copyright and broadcast issues.

In late 1999, a company called iCraveTV began retransmitting 17 Canadian and U.S. television signals all over the world to anyone who had Internet access. The company received over-the-air broadcast signals, converted them to digital and Internet compatible format, and then streamed them over the Internet. The company did not pay any of the fees or royalties that regular broadcasters must, and thus the copyright holders of the material being broadcast by iCrave were not receiving any of the compensation to which they were entitled. iCrave claimed it had a CRTC new media exemption order granting new media operators freedom from regulations, and also argued that it could operate under the compulsory licence for retransmissions created under section 31 of the Copyright Act, which had been adopted before the Internet emerged as a global network.

Reaction to iCrave's business was swift. Legal proceedings were launched in both the United States and Canada seeking to prevent iCrave from transmitting copyrighted material without permission. While these legal responses succeeded in stopping iCrave, they did little to address the underlying issue, which was the particular relationship between new technologies and the compulsory licence established for retransmission under section 31 of the Copyright Act.

The iCrave situation exposed a problem with the compulsory licence. When it was created, the compulsory licence was intended to apply only to the retransmission of over-the-air signals. Retransmission, in turn, covered only cable and satellite companies. What to do about Internet retransmission, which was neither cable nor satellite? When it was enacted, the Copyright Act simply did not contemplate the development of new technologies that operated in another, different fashion and thus is silent on this issue. The Copyright Act therefore does not specifically exclude the Internet from the retransmission regime set out in section 31 of the Act. Moreover, in 1999 the CRTC decided it would not regulate the Internet,⁵ leaving the issue of Internet retransmission entirely up in the air.⁶

In 2001, a company called JumpTV.com, an Internet-based broadcaster, applied to Copyright Board Canada for a tariff in connection with the retransmission of television networks. It sought to offer viewers with personal computers a fourth way — after over-the-air, cable, and satellite television systems — to receive television broadcast signals. The distinction between JumpTV and iCrave is that JumpTV applied to Copyright Board Canada to establish a tariff for Internet retransmission before commencing operations; iCrave did not.

This application triggered a six-month consultation period jointly sponsored by the Department of Canadian Heritage and Industry Canada to examine issues concerning Internet retransmission and the compulsory licence. As a result, Bill C-11 (An Act to amend the Copyright Act) was introduced in the House of Commons to create a framework for non-conventional broadcast programming to operate under the terms of the compulsory retransmission licence available to conventional transmitters. This bill was referred to the Standing Committee on Canadian Heritage for study.

The question of whether to allow Internet transmitters to have the benefit of the compulsory licence conventional broadcasters use generated much discussion.

Representatives from JumpTV who appeared before the Committee argued that it could — and indeed wished to — operate under the same regulatory regime as conventional broadcasters.⁷ They urged the Committee to enact regulations that would allow them to retransmit signals as satellite or cable companies currently do, and submitted that the only difference between themselves and conventional broadcasters was the terminus of the broadcast signal — a personal computer as opposed to a television set.

Furthermore, in their submissions and evidence to the Committee, they stressed that they would pay all applicable tariffs and fees for copyright under the compulsory licence, and would ensure that appropriate technology would be in place to ensure that these Internet-based signals would only be transmitted within Canada to paying subscribers.⁸ Several witnesses appeared before the Committee to testify to the efficacy of software that limits reception of Internet-retransmitted signals to specific geographic locations.⁹

It is this latter point that surfaced as one of the most contentious issues with regard to Internet retransmission. Given the ease with which material may be copied and transmitted over the Internet, several witnesses expressed some scepticism as to whether signals transmitted via the Internet could in fact be geographically constrained or limited to a specific area.¹⁰ They argued that the global reach of the Internet might well lead to copyright-protected material being distributed. Nevertheless, representatives from JumpTV maintained that if the licencing regulations required a geographical restriction in order to broadcast signals over the Internet, then this would be adhered to.¹¹

A further area of concern with granting a compulsory licence to Internet broadcasters was the potential dilution of existing exclusive-rights-holder's interests in the broadcasting of live sporting events. The Committee heard that exclusive broadcast rights are among the most valuable assets of a professional sports league and professional sports team. Accordingly, the availability of an additional compulsory licence to an Internet retransmitter for potential broadcast to local broadcast territories — and hence another broadcast option for viewers — makes those broadcast rights less valuable.¹² Any extension of the compulsory licence to Internet retransmitters was resisted on this basis.

Other industry representatives such as the Canadian Motion Picture Distributors Association, the Canadian Association of Broadcasters, the Society of Composers, Authors and Music Publishers of Canada, and the Canadian Film and Television Production Association also resisted the extension of compulsory licences to Internet retransmitters. In their submissions to the Committee, these organisations called for a so-called "Internet carve-out" excluding Internet retransmitters as entities that can apply for a compulsory licence. Reasons cited included concerns that Internet technology constituted an unwarranted expropriation of copyright owner's exclusive rights and that copyright owners would not be effectively protected in light of the Internet's rapidly growing and evolving technology.¹³ There were also concerns that, given that nearly 100% of Canadian households have a television set, with more than 75% of those subscribing to the services of a conventional broadcasting undertaking, Internet retransmission would not enhance access to the broadcasting system.¹⁴

Resistance to licencing Internet broadcasting came from further afield as well. The United States House of Representatives Committee on the Judiciary expressed concern in a letter to the Canadian Ambassador to the United States that attempts to amend the Copyright Act to allow Internet retransmitters a compulsory licence disregards the singular features of the Internet in such a way that to facilitate the pirating of copyrighted U.S. works and the global leakage of U.S. copyrighted content.¹⁵ Moreover, it would undermine if not eradicate the ability of U.S. copyright holders to control the distribution of their material to conventional broadcasters, thus dramatically reducing the value of the material.

After hearing submissions from interested parties and organizations, the Standing Committee on Canadian Heritage amended Bill C-11 to deny Internet retransmitters eligibility for the compulsory licence necessary to legally broadcast material over the Internet. The Copyright Act was accordingly amended to explicitly exclude Internet broadcasters from the definition of "retransmitter" and "new media retransmitter".

Bill C-11, as amended, received Royal Assent on 12 December 2002. The intent of the amendment is to clarify that the interests of broadcasters and copyright holders will be protected in the digital environment. In January 2003, the CRTC restated its position that it will not regulate internet retransmitters. In its report to the Governor General in Council, it said that "it does not consider it necessary or appropriate to require the licencing of internet retransmitters."¹⁶

F. Neighbouring Rights

Neighbouring rights represent three additional types of subject matter that are not included within the statutory definition of "works" in the Copyright Act but, nevertheless, receive copyright protection under the Act. These additional areas are (i) performer's performances, (ii) sound recordings and (iii) communication signals.

Originally, copyright related to author's and artist's "works", which as now defined in the Copyright Act include literary, dramatic, musical and artistic works. These remain the foundation of copyrighted interests. In more recent times, however, performers, record producers and broadcasters have been accorded certain rights in their "neighbouring works".

These rights are the result of amendments to the Copyright Act made in 1997. Prior to this time, Canadian radio stations were obliged to pay royalties to the music rights holders, for example, music composers and lyricists. The recognition of neighbouring rights, however, extended copyright to performers and record manufacturers on the basis that they added a substantial value to musical composition and are as deserving of compensation as the composer is. Today, radio stations are obliged to pay royalties not only to the music rights holders, but to the performer and record maker as well.

If copyright is intended to protect an artist's or author's original work, it may be difficult at first to see why the performance, recording and broadcast of Tosca should all be copyrighted. After all, the conductor and musicians did not write the opera; Puccini did. Even if the performance is dazzling and innovative, it could be argued there is nothing fundamentally original about it — it remains Puccini's work. The neighbouring right, however, and thus this particular copyright lies in the performance itself, not the original work, so it is a step removed from the author's right (and hence a "neighbouring" right). Thus, according to this argument, the interpretation of a song by a singer is as worthy of protection as the work in the original song itself. By way of example, it could be argued that Judy Garland's rendition of Over the Rainbow is the song, notwithstanding the fact that it was written by Harold Arlen and E.Y. "Yip" Harburg.

Similarly, although the makers of sound recordings and broadcasters do no original work in recording or transmitting the signal, they are entitled to a copyright that is intended not to award originality but to protect their investment in the creation and distribution of the sound or signal.¹⁷

G. Ephemeral Recordings

Ephemeral recordings are another exception to the general prohibition against copying material. In certain limited circumstances, the Copyright Act allows for the making of "ephemeral recordings" — temporary copies of a work to facilitate its broadcast use.

Broadcasters had long claimed that they were permitted to make temporary ("ephemeral") recordings of works for later broadcast as an ancillary part of the public telecommunications right, provided that all the requisite royalties have been paid to the appropriate bodies. Broadcasters use this practice to broadcast an event live — such as an outdoor concert performance — and to broadcast a delayed recording of the same performance at a later time to another time zone. The live and delayed television broadcasts of Canada Day celebrations across the country are a good example of this use.

This had been the subject of some controversy: copyright owners disagreed with the broadcaster's position, arguing that the Copyright Act granted them separate and distinct rights in the broadcast and the recording of their works, and that when their work was copied, they were entitled to an additional royalty over and above the broadcast payment. This position was validated in a 1990 Supreme Court of Canada decision.¹⁸ The Court in this case found no so-called "ephemeral rights exception" to the Copyright Act, and stated that in order for such a right to exist, Parliament would have to create it.

When the Copyright Act was amended in 1997, Parliament created an ephemeral recording exception to the Act, generally permitting the making of ephemeral copies of performances under certain specified terms and conditions. This exception, however, was very narrow; more importantly, it would not apply if "a licence is available from a collective society to make the fixation or reproduction of the performer's performance, work, or sound recording"¹⁹ This meant that television and radio stations can make ephemeral copies unless a collective representing the copyright owners asked to be paid for these copies.

Quite naturally, collectives representing music rights holders were established and then sought new tariffs for the reproduction of their works. The new tariffs subsequently established by Copyright Board Canada make broadcasters liable for an additional royalty payment for making the ephemeral recordings.

Not surprisingly, however, the establishment of these new tariffs for ephemeral reproductions were resisted by broadcasters, who suggested that in addition to adding another onerous royalty provision, the exception did little to balance the interests between right holders and broadcasters and effectively negated any meaningful benefit offered to broadcasters by the ephemeral recording exception amendments.²⁰ The broadcasters stated the temporary recordings — made only to facilitate broadcast use of programming that had already been paid for — held no secondary commercial value to broadcasters and did no harm to the rights owner.

This argument may have particular resonance with respect to commercial radio broadcasts of music. Commercial radio stations pay royalties to performing rights and neighbouring rights collectives whenever they play music over the radio. In order to facilitate broadcast, stations will upload an individual music CD onto the station's server or copy an older, vinyl recording to CD and then upload that. This is done entirely for convenience in light of the modern technology used in broadcasting sound recordings; indeed, the days of spinning turntables live in radio stations are long gone.

However, this act of uploading a CD (called a "transfer of medium" and permitted as an exemption under the Copyright Act) constitutes the creation of an ephemeral copy and thus the need for a further royalty payment to a reproduction rights collective. Committee members witnessed a demonstration of this process on their visit to CJAD Radio in Montréal. It is worth noting that the transfer of medium exemption exists as a very narrow exception to the Copyright Act and the licence to make an ephemeral copy is limited to a particular composition rather than the entire music CD. That means that if a CD contains 10 songs, broadcasters must obtain permission and pay royalties to copy each individual tune.

This transfer of medium exemption remains a point of contention between broadcasters and copyright holder collectives. Broadcasters continue to call for legislative change to the need for a royalty to be paid to reproduction collectives, citing the fact that they already own the work being copied and have already paid for the right to play it. The Canadian Association of Broadcasters made this assertion in both its brief and presentation to the Heritage Committee, as did other private broadcasters.²¹ Although they made no formal submissions to the Standing Committee on Canadian Heritage, copyright collectives continue to assert their right to charge royalties on reproductions of recordings as a process separate from their broadcast.

H. Conclusion

The Committee is very much aware that the intersection of digital technology and copyright law raises significant issues, including such major topics as Internet retransmission and the creation of temporary or ephemeral copies of material to facilitate broadcasting. Section 92 of the current Copyright Act calls for a mandatory review of the legislation within five years of its coming into force in 1997, and for the study of that review by a parliamentary committee. In October 2002, the review entitled Supporting Culture and Innovation: Report on the Provisions and Operation of the Copyright Act²² was completed and has been referred to the House of Commons Standing Committee on Canadian Heritage for study.

Given that the House of Commons Standing Committee on Canadian Heritage has been tasked to embark on this study, with a particular emphasis on copyright in the face of rapid technological change, the Committee felt it wise to refrain from specific recommendations in this report. That being said:

The Committee recognizes the pressing need for copyright reform in the digital age and intends to address all relevant broadcasting issues during its forthcoming statutory review of the Copyright Act

Endnotes