HERI Committee Meeting

37th PARLIAMENT, 3rd SESSION

Standing Committee on Canadian Heritage

EVIDENCE

CONTENTS

Tuesday, April 20, 2004

¿

0915

The Chair (Ms. Sarmite Bulte (Parkdale—High Park, Lib.))

¿

0950

Mr. Claude Brunet (Legal Counsel, Ogilvy Renault, Canadian Private Copying Collective)

¿

0955

À

1000

The Chair

Mr. Howard Knopf (Member, Balanced Copyright Coalition)

À

1005

À

1010

À

1015

The Chair

Mrs. Susan Lott (Counsel, Public Interest Advocacy Centre)

À

1020

À

1025

The Chair

Mr. Ken Thompson (Director, Public Policy and Communications, Alliance of Canadian Cinema, Television and Radio Artists)

À

1030

À

1035

The Chair

Ms. Lyette Bouchard (Assistant Director General, Association québécoise de l'industrie du disque, du spectacle et de la vidéo (ADISQ))

À

1040

À

1045

The Chair

Mr. Jim Abbott (Kootenay—Columbia, CPC)

À

1050

Mr. Claude Brunet

Mr. Jim Abbott

Mr. Claude Brunet

À

1055

Mr. Jim Abbott

The Chair

Mr. Benoît Sauvageau (Repentigny, BQ)

Mr. Claude Brunet

Mr. Benoît Sauvageau

The Acting Chair (Hon. John Harvard (Charleswood St. James—Assiniboia, Lib.))

Mr. Benoît Sauvageau

The Acting Chair (Hon. John Harvard)

Hon. Paul Bonwick (Simcoe—Grey, Lib.)

Mr. Howard Knopf

Hon. Paul Bonwick

Mr. Howard Knopf

Á

1100

Hon. Paul Bonwick

Mr. Howard Knopf

Hon. Paul Bonwick

Mr. Howard Knopf

Hon. Paul Bonwick

Mr. Howard Knopf

Hon. Paul Bonwick

Mr. Howard Knopf

Á

1105

The Chair

Mr. Claude Brunet

The Chair

Mr. Claude Brunet

Á

1110

The Chair

Mr. Ken Thompson

The Chair

Mr. Clifford Lincoln (Lac-Saint-Louis, Lib.)

Mr. Claude Brunet

Á

1115

Mr. Clifford Lincoln

The Chair

Mr. Howard Knopf

Mr. Clifford Lincoln

Mr. Ken Thompson

Á

1120

The Chair

Ms. Lyette Bouchard

The Chair

Mr. Jim Abbott

Mr. Claude Brunet

Á

1125

Mr. Jim Abbott

Mr. Claude Brunet

The Chair

Hon. John Harvard

Á

1130

Mr. Howard Knopf

Hon. John Harvard

Mr. Howard Knopf

Mr. Clifford Lincoln

Mr. Howard Knopf

Hon. John Harvard

Mr. Howard Knopf

Hon. John Harvard

Mr. Howard Knopf

Hon. John Harvard

Mr. Claude Brunet

Á

1135

Ms. Lyette Bouchard

Mr. Claude Brunet

The Chair

Mr. Ken Thompson

The Chair

Mrs. Susan Lott

The Chair

Hon. Paul Bonwick

Mrs. Sam Banks (Committee Researcher)

Hon. Paul Bonwick

Á

1140

Mr. Howard Knopf

Hon. Paul Bonwick

Mr. Howard Knopf

The Chair

Mr. Claude Brunet

The Chair

Ms. Lyette Bouchard

Á

1145

The Chair

Mr. Clifford Lincoln

Mr. Claude Brunet

Á

1150

The Chair

Hon. John Harvard

The Chair

Mr. Ken Thompson

Á

1155

Ms. Lyette Bouchard

The Chair

Mr. Howard Knopf

The Chair

Mr. Howard Knopf

Mr. Howard Knopf

Hon. John Harvard

Mr. Howard Knopf

The Chair

Â

1200

Mr. Howard Knopf

The Chair

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CANADA

Standing Committee on Canadian Heritage

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NUMBER 007

l

3rd SESSION

l

37th PARLIAMENT

---

EVIDENCE

Tuesday, April 20, 2004

[Recorded by Electronic Apparatus]

¿  (0915)  

[English]

    The Chair (Ms. Sarmite Bulte (Parkdale—High Park, Lib.)): Ladies and gentlemen, I'd like to call the meeting to order and have the witnesses take their seats, please.

    Good morning, ladies and gentlemen. Pursuant to Standing Order 108(2), this committee is studying the government status report on copyright reform. Today we hope to have the witnesses address private copying and WIPO ratification. We would ask that the presenters speak for no longer than eight minutes, so that we can then go on to questioning by the committee.

    Monsieur Brunet, perhaps you could begin on behalf of the Canadian Private Copying Collective.

¿  (0950)  

    Mr. Claude Brunet (Legal Counsel, Ogilvy Renault, Canadian Private Copying Collective): Merci, madame la présidente.

    I practise copyright law in the Montreal offices of Ogilvy Renault. I have been involved, one way or the other, in each and every phase of the revision of Canada's Copyright Act since 1974, and I therefore modestly claim to be familiar with the issues before this committee.

    I appear before you as counsel to the Canadian Private Copying Collective. Officially, the CPCC has no position with respect to whether or not Canada should ratify the WIPO treaties. However, the CPCC holds very strongly that ratification of the WPPT does not necessitate a modification of the current private copying regime in Canada. This, of course, is the issue that is before you today.

    There will be those who try to use this opportunity to vent before the committee everything they do not like about the private copying regime, but the issue is not whether the private copying regime can be perfected. The only issue before this committee is whether there is anything in the private copying regime that prevents Canada from ratifying the WPPT. Admittedly, the private copying regime must comply with the requirements of the WPPT. Does it?

    Those who say it does not say Canada must extend the benefits of its regime to producers and performers from all WPPT countries. In the lingo of international law this is known as providing national treatment. As you know, under the present Copyright Act, authors and composers from all over the world are receiving equitable remuneration when their music is copied in Canada, but only Canadian performers and Canadian sound recording makers are paid. So the question becomes, does the WPPT require that performers and producers all over the world be paid when their performances and sound recordings are privately copied in Canada? That is what is meant by the national treatment issue.

    Opponents of the WPPT and of the private copying regime say it is an issue of the utmost importance. The truth is that after the negotiations for the WIPO treaties were concluded in 1996, this issue never appeared on the Canadian radar until the publication of the section 92 report. Let's look at the history.

    Bill C-32, which contained the provisions introducing the private copying regime, was tabled in the House in 1996. Government officials appeared in the House and answered questions about the bill at that time; they never raised a possible difficulty with the WPPT. After their appearance before Parliament the officials left for Geneva to negotiate the WIPO treaties. Ms. Danielle Bouvet, who was the head of the Canadian delegation, told this committee last March 30 that “private copying has been one of the very important issues during the negotiations”. Indeed, the WIPO secretariat had initially proposed in 1993 the adoption of a broad concept of national treatment for everything in the treaties. This approach was the one promoted by the U.S. The vast majority of countries, however, wanted to limit national treatment to certain specific rights.

    At the diplomatic conference of 1996 the U.S. proposed language that would extend national treatment in respect of all the subject matter in the WPPT. Canada, on the other hand, proposed a paragraph according to which national treatment does not “apply to any regime under which a contracting party provides remuneration to performers or producers of phonograms for private copying”. While agreeing with the Canadian position, the European Community found the Canadian clarification to be too limiting and too specific. It proposed instead that national treatment apply only to those rights specifically mentioned in the national treatment provision. In the end this view was incorporated into a proposal made by the Switzerland delegation. That Swiss proposal was adopted by a vote of 88 in favour, 2 against--the United States and Thailand--with 4 abstentions.

¿  (0955)  

    When the Canadian delegation came back from the diplomatic conference, Ms. Bouvet, the head of the delegation, was indeed capable of reporting that the private copying regime did not have to be amended for Canada to be able to ratify the WPPT. Bill C-32 was passed by Parliament and came into force on September 1, 1997. Three months later Canada signed the two WIPO treaties.

    In 1998 the government mandated two copyright experts, Johanne Daniel and Lesley Ellen Harris, to report on what adjustments were needed to the Copyright Act in order for Canada to satisfy its obligations under the WPPT. In their July 1998 discussion paper the two experts saw no reason to even look at the regime of private copying.

    In 2001 Industry Canada and Canadian Heritage jointly issued a series of discussion papers on copyright reform. The discussion papers nowhere mention a possible difficulty with the private copying regime arising from Canada's eventual ratification of the WPPT.

    It is only in the section 92 report that suddenly, out of nowhere, there appears the bizarre statement that “when Canada ratifies the WPPT, it may be necessary to amend the act by paying royalties to sound recording makers and performers from all WPPT countries on a national treatment basis”. One must conclude that whoever wrote this sentence in the section 92 report ignores entirely the history of the WPPT negotiations.

    Meanwhile, in preparation for ratification, European countries are currently in the process of revising their copyright laws. They do so on the basis of a European directive. Interestingly, that directive does not compel the member states to extend their private copying regimes to nationals of other countries. However, the European Community treaty imposes a general obligation not to discriminate against nationals of other European countries. As a result, European countries will extend the protection of their private copying regimes to one another, but will not extend that protection to countries outside the European community. And they will all be ratifying the WPPT. Why should Canada act differently?

    There is nothing in the current private copying regime that prevents Canada from ratifying the WPPT. Your committee should put an end to this masquerade. Ideally, in an interim report, you should take note officially of the fact that nothing in the WPPT compels Canada to offer national treatment under its private copying regime. For the sake of one of the most important music industries in the world, the Canadian music industry, and of all those Canadians who try to make a living of it, you would also recommend in an interim report that Canada promptly ratify the WPPT.

    Thank you very much, Madam Chair.

À  (1000)  

    The Chair: Thank you very much, Mr. Brunet.

    Mr. Knopf, you are here wearing two hats, one on behalf of the Balanced Copyright Coalition, the other on behalf of the Canadian Coalition for Fair Digital Access. So we will give you 15 minutes.

    Mr. Howard Knopf (Member, Balanced Copyright Coalition): Thank you very much, Madam Chair. That's very gracious.

    You mentioned two hats. I should also add that I was counsel for the major retailers at the recent Copyright Board hearing dealing with private copying. My friend Mr. Brunet was across the table for the CPCC. I was also recently counsel for the Canadian Internet Policy and Public Interest Clinic at the University of Ottawa. We made successful arguments in the recent Federal Court case on file sharing, which I will tie in briefly with what we're talking about here today.

    One hat it's been suggested I clarify I am not wearing today. I emphatically repeat that I am not wearing my hat as chair of the Canadian Bar Association copyright committee. I'm proud to be the chair of that, but I am not speaking today on behalf of them or any of the members.

    I'll divide this up into two sections, the first being for the Balanced Copyright Coalition. As you may know, the Balanced Copyright Coalition is a coalition of major broadcasting, cable television, high technology, ISP, and retailer corporate interests and many prominent academics, as well as Canada's leading public interest advocacy group. While I believe that my views are consistent with official BCC positions to date, I am making them in my personal capacity as one who is a founding member of the BCC and has been asked to lecture on some of these topics in academic, government, and civil society circles over the last several months.

    The major record industry multinationals represented by CRIA and through other emanations, such as the CPCC, which are closely related, are pushing for WIPO treaty implementation and other trade agendas that would have, among other things, the following effects. It would impose the controversial American-style Digital Millennium Copyright Act, the so-called DMCA regime, on Canadians. This would have the effect of crippling promising new technologies. It will inhibit research into encryption and security on the Internet. It will limit public access to creative works and research materials. It will effectively provide perpetual copyright protection through technological locks on the public domain. It will erode or eliminate fair dealing and fair use rights of users, users' rights, as the Supreme Court of Canada called them just a few weeks ago, March 4, in the landmark CCH and Law Society case. And it will place undue responsibility on ISPs and other intermediaries. It will criminalize the behaviour of many millions of Canadians who are engaged in normal music enjoyment and believe in good faith that their behaviour is both legal and acceptable. It will remove hard-won privacy rights from individual Canadians.

    None of the above is conjecture. All of this can be seen by looking at what has happened in the United States in the few years since they passed their Digital Millennium Copyright Act. You can see a lot of these horror stories, the unanticipated results, on the EFF.org, electronicfreedomfoundation.org, website.

    To add additional concern, I was privileged to be a speaker--I've done this for a few years now--at the Fordham conference last week in New York, a very important conference. The senior private sector lawyers who work very closely with the American government on these issues essentially admitted that the DMCA is what they consider to be minimally acceptable WIPO implementation. Anything less than their version of acceptable, which is the DMCA, will not be acceptable down the line and will be subject to dispute resolution, which I will presently get to. This is what I call the free trade trap, and this is the very dangerous route on which we have embarked.

    If we implement and ratify the WIPO treaties without doing it in a manner that's satisfactory to the Americans, lots of people in this room will say, it's okay, you did a good job, we're in compliance. A year or two from now, when we are required by the Americans to join the FTAA, the free trade area of the Americas agreement that is moving along, we will be required, if we haven't done so, to implement and ratify the WIPO treaties, and they will become subject to very rigorous dispute resolution and very powerful retaliation mechanisms that will be determined not in Geneva, where we can expect a certain degree of neutrality and erudition, but in Miami, Florida. That's where the headquarters of the FTAA is going to be.

À  (1005)  

    This is the trap we are being invited to walk into. It's a one-way trap. There's no exit. So anybody who tells you there are no consequences to this is not telling you the whole story.

    The BCC, along with the CCFDA, which I'll get to in a few seconds, is also concerned that if we fall into this trap we'll be required to double the levies that are now paid out under private copying. And we're talking about hundreds of millions of dollars, all of which will leave Canada, and none of which will go to any Canadian creators.

    Now I'll put on my CCFDA hat. CCFDA is a coalition of manufacturers, distributors, and retailers of digital hardware and media. The CCFDA website is www.ccfda.ca. I'm speaking today as counsel for the CCFDA on these issues.

    By the way, before I forget, I would like to take issue with something Mr. Brunet said a few minutes ago. This issue, the issue we're talking about today, did not come out of the clear blue sky. It's been on people's radar screens for a while. I must say, I take part of the blame. I outed the issue in an opinion piece in the National Post on October 10, 2002. I've given a copy of that to the clerk, Unfortunately, I only have it in English, but if you have a chance to look at it, you may find it interesting, especially given the timing of it.

    The other thing is that there's been a whole lot more learning since then, which I'll get to. We have some very important authorities who clarify the issue.

    The clear and simple message of the CCFDA to the committee is that the Canadian private copying levy scheme, which is already the richest music levy scheme in the world and is unique among anglo-American countries, is not working in the interests of Canadian creators. In fact, it is causing serious problems, not only for the CCFDA members but also for the music industry itself. It is clearly the major and perhaps fatal obstacle to WIPO ratification in Canada.

    What should we do about it? Well, the CCFDA's answer is very simple. The real estate agent says, what's important? Location, location, location. We say, what to do about this? Repeal, repeal, repeal.

    A major example of the trouble that part VIII of the Copyright Act is causing can be seen in the March 31 court decision that went against CRIA on file sharing. I was honoured to be the counsel for CIPPIC and advanced a successful copyright argument. This decision was not about policy. We simply asked the judge to look at the existing law of Canada, which he did. That law was put in place at the behest of the music industry back in 1997.

    In this controversial levy scheme, the music industry gave up its right to sue individuals for private copying in exchange for what has turned out to be--I think they knew it would be--an extremely rich levy. The short-term gain and long-term costs are now becoming apparent to even the most cynical members of the music industry itself.

    Canadians have paid and continue to pay dearly for the right to make private copies of sound recordings, including those downloaded from the Internet. As I say, it's the richest music levy scheme in the world. Although our music industry is very important and very wonderful, the fact of the matter is that Canada accounts for only about 2% of the world's music publishing industry, if you measure it in actual dollars. Subjectively, of course, it's wonderful, but it's only 2% of the world's music industry, and yet somehow we see fit to have the richest levy scheme in the world, most of the money going to New York and L.A. It will only get worse if we fall into this trap.

    Ironically, CIPPIC's victory in the Federal Court was also a big favour to my friends in the music industry on the lobbying front. Of course, they're here now telling you that the sky really is falling and that things really are broken--that the law they put in place seven years ago really is broken.

    The decision has focused and accelerated the debate, of course, and that's good. It has also, I must say, generated some considerable interest and approval in many circles around the world, as I heard at Fordham last week.

À  (1010)  

    We agree with the music industry that something has to be done here, but we don't think the law should be patched up, we think it should be repealed. The music industry wants not only levies but also lawsuits. They want it not both ways but in fact all ways.

    They have levies, which most people call taxes, on blank CDs. They are paid by everybody, regardless of whether you use them for music or not. You pay them even if you use them to back up your income tax files. They want a tariff or tax for use of music by all consumers on all Internet accounts and ISPs, whether or not the user is ever going to listen to music at all.

    They want to be paid 99¢ a track from the one and only English language commercial music downloading service in Canada, with products that don't sound as good as the original CDs and that have all kinds of technical restrictions on them. And then, when you offload them onto your iPod or portable MP3 device, you have to pay a $25 levy on that, which they succeeded in getting unless we overturn it.

    They want what they consider to be unauthorized downloading to stop, but they still want to keep and indeed to increase the levies that have already generated over $100 million to date. Most of that will eventually leave the country, if and when it gets distributed. And very little of it has been distributed, especially to actual real artists.

    Last but not least, they want to sue downloaders and file sharers, who are often their best customers and often pay the most in levies on blank audio recording media and go to the record store more often than anybody else, and buy at the record stores.

    They also have another little trick in their bag that's becoming apparent. They're seeking a regulation under part VIII of the Copyright Act to have hard disk drives exempted from the definition of blank audio recording media. This is a bit like the zero rating scheme. It sounds like a nice thing; it sounds like a good thing. It's a Trojan horse. What it will do, if they're right--and they may, heaven forbid, be right--is enable them to go back into court and sue downloaders, because that will no longer be a product covered by the exemption. So there's nothing generous about it. It is nothing but a Trojan horse that will undermine the current scheme. We shouldn't be tinkering with it; we should be repealing it.

    It's commendable that the Minister of Canadian Heritage and even the Prime Minister are concerned about the well-being of the Canadian music industry, but make no mistake, CRIA, which is really the RIAA....

    I have to tell you about this. One of the international lobbyists for the parent organization in New York last week, a woman at IFPI, made a terrific Freudian slip, which was probably the best joke of the conference. She referred to CRIA as the Canadian Recording Industry “of America”.

    My point is that CRIA does not speak for the Canadian music industry and it most emphatically does not speak for Canadian artists. It speaks for the major multinational record companies. In fact, Canadian Press reported on April 7, just after the Junos, and I quote:

Sarah McLachlan said the industry “has had their heads in the sand for a long time”.

“They're realizing a little too late that things have to change dramatically,” she said.

“Sharing music is fantastic. That's how people hear about new artists. That's how music gets spread. The music industry has to find a way to get on board and work within those parameters or they're going to get left behind.”

    Specifically on national treatment, I'd like to deal with a few points that Mr. Pfohl made a few days ago. I dealt with them in the April 2 issue of the Canadian New Media reports, a copy of which I have given to the clerk with the permission of the publisher. I wrote:

Pfohl says that there is an “international consensus” on the national treatment issue and that....“All the international experts agree.”

    That is simply incorrect. That is actually false. Dr. Mihály Ficsor, the father of the treaties as senior former assistant director general at WIPO, published a book a couple of years ago that has contributed immeasurably to this debate. He says that private copying levies have to be dealt with on a national treatment basis.

    This is an 800-page book, a very expensive and learned book. For that information to be withheld from the committee is not, I think, a good thing. I have given to the clerk a copy of excerpts from the book. Unfortunately, it is only available in English, but I would urge you to read it.

À  (1015)  

    I mentioned that there will be recourse under international trade law through the free trade trap that I talked about. Mr. Pfohl also failed to point out that about two-thirds of the current levies go to music publishers--half of which go to copyright owners, half of which go to music publishers--and that his companies are major music publishers now.

    The bottom line is simply this: we will be drawn into a free trade trap here, and hundreds of millions of dollars will leave the country.

    On the policy issues, the music industry is ignoring its own favourite economist, Stan Liebowitz. You are, I hope, aware of the Harvard and University of North Carolina study.

    I hope you are as concerned as I am about what the music industry calls the “shock and awe” strategy of turning children and families into collateral damage.

    The CCFDA believes these issues should be resolved in Parliament through a fully informed debate, without any information being withheld from the committee.

    The plain and obvious solution is to repeal part VIII of the Copyright Act, which will enable the music industry to go in and sue ordinary Canadians, to be sure. The other thing you have to do at the same time is get rid of the dreadful statutory damages provisions in the Copyright Act, except in the case of blatant and “egregious”--the music industry's favourite word--commercial infringement situations, and to totally decriminalize any activity by individuals that does not involve financial gain or result in provable and quantifiable financial harm in excess of specified financial limits. These are well-known concepts.

    I would ask on behalf of the CCFDA that we reserve the right to supply some supplementary materials in writing, through the clerk.

    I thank you for your indulgence on the time and for your attention.

    The Chair: Thank you very much, Mr. Knopf.

    Next we have Susan Lott, counsel with the Public Interest Advocacy Centre.

    Ms. Lott.

    Mrs. Susan Lott (Counsel, Public Interest Advocacy Centre): Thank you very much, Madam Chair.

    I would like to thank you, first of all, for giving the Public Interest Advocacy Centre the opportunity to provide input to this committee on some aspects of copyright reform that this committee has been engaged in over the last year. I think it's of critical importance that the committee hear from a range of voices with a stake in the issues being raised by copyright reform in the digital era, with the pressure to meet our international obligations with respect to copyright. This means, of course, not just creators and copyright holders or their collective representatives, but users or consumers of copyrighted materials.

    By way of introduction, the Public Interest Advocacy Centre is a non-profit organization that provides legal services and does research for Canadian consumers and the organizations that represent them. Our work primarily consists of looking at important public services, which includes telecommunications, broadcasting, energy, financial services, and transportation. We also represent coalitions of low-income and vulnerable consumers in front of agencies such as the CRTC and the Ontario Energy Board. Through the contributions program for non-profit consumer and voluntary organizations of the Office of Consumer Affairs, Industry Canada, we provide research on consumer issues affecting the marketplace, including a report we recently completed that reviewed the individual public submissions that had come to the federal government as they initiated the reform of the Copyright Act. It's called The Consumer's View of Copyright. We're also a member of the Balanced Copyright Coalition, which is this coalition of public interest advocates, academics, Canadian Internet, telecommunications, broadcasting, technology companies, and industry associations that have an interest in the reform of the Copyright Act.

    I wanted to speak about the private copying levy and the WIPO ratification and address very briefly some of the larger consumer concerns we have with respect to WIPO ratification.

    Reviewing this committee's recent transcripts suggests that there's real uncertainty about the current conformity of Canada's private copying law regime and the levy with WIPO treaties. I refer to March 25, line 0915, where there was an exchange about whether it does currently conform or whether changes would have to be made. As a public interest organization that comments on consumer issues, our view is obviously coming from the perspective of the end-user of copyrighted materials. Here we have three very obvious concerns.

    The first is high costs for end-users or consumers. We know consumers are already paying a levy on blank recording media, which now include MP3 players, as a result of the Copyright Board decision of December 12, 2003. Affording national treatment obligations under the WIPO treaties is going to greatly increase the costs that are being imposed on consumers.

    Second, we know this levy is generally imposed, despite very minor cost differences in the types of recording media it applies to. This means it doesn't distinguish between non-infringing and infringing uses. Therefore, consumers are already paying a levy, even though they may be using recordable media simply to back up computer files, for example, which is not necessarily for any copyright-related purpose.

    Finally, consumers have little knowledge of copyright. They're being pulled into this debate through legal actions and subjected to new fees and limitations without any clear understanding of what constitutes infringement and what is permissible under the act.

    We think the ratification of WIPO has to reflect the current Canadian legal environment. This is a legal environment, with a number of recent decisions, that is clearly carving out a space for new technology and trying to determine how to ensure that there's a balance between the needs of users to have access to copyrighted materials for non-infringing purposes and the needs of creators and rights holders.

    The fair dealing provision of the Copyright Act is a critical tool for consumers. Our concern is that if we have legal protection for technical measures such as is found in the Digital Millennium Copyright Act, this can have the effect of eliminating fair dealing by protecting measures that even prevent access to copyrighted works. The U.S. experience represents a fallout of this for the academic and research community. There have been numerous legal cases, there have been numerous bills in Congress trying to mitigate the effects of the legislation, and strong concerns have even been expressed by the Register of Copyrights, who is to monitor the unfolding of the DMCA.

À  (1020)  

    In Canada, recent court cases have considered and narrowed the definition of copyright infringement in the digital era. We have the private copying exception to infringement. We have the Copyright Board decision of December 12 that indicated that downloading music for personal use does not amount to infringement. We have, as mentioned already, the CCH decision, which broadened very much user rights and what constitutes authorizing, and the recent Federal Court decision that denied the motion by CRIA, where the court held that the act of placing music files on file-sharing services, which is an uploading function, does not constitute copyright infringement.

    When we looked at the public submissions made to the federal government in the 2001 period, it was interesting to see that out of about 700 individual submissions, 540 indicated real concern about amendments to the act that would augment the rights of copyright holders over the public, whether through “making available right”, legal protection for technical measures, or rights management information, which is also linked with the technical measure. The general concern being expressed was that technical protection measures eliminating legal uses would upset the balance between copyright holders and the public in favour of copyright holders.

    So I would say in conclusion that we need to take the time to adopt changes that won't upset the balance between copyright users and holders. We don't understand the rush. We think it's really important that all aspects of the debate be heard and all nuances of the issues be thought out. We also think Canada isn't behind the other G-7 countries in respect of treaty ratification. We understand that only the U.S. and Japan of the G-7 have at this point ratified the WIPO treaties. We think the changes in the digital environment affecting copyright suggest the need for new models. We look at the creative commons licensing regime, which allows rights holders to specify their own conditions of use, which means licences don't override fair dealing but can have a voluntary surrender of some or all parts of copyright. Finally, we think a false premise regarding the Internet has been reflected in the status report, that it is a commercial enterprise only. I think it is important to remember that the Internet's fundamental premise and the reason for its phenomenal success is that its organizing structure involved a non-market exchange of information. It created a public forum that must be protected and not eliminated by digital copyright reforms.

    Thank you very much.

À  (1025)  

    The Chair: Thank you very much, Ms. Lott.

    Next we have Mr. Thompson from the Alliance of Canadian Cinema, Television and Radio Artists. Welcome.

    Mr. Ken Thompson (Director, Public Policy and Communications, Alliance of Canadian Cinema, Television and Radio Artists): Good morning, Madam Chair and honourable members of the committee.

    My name is Ken Thompson. I'm director of public policy and communications for the Alliance of Canadian Cinema, Television and Radio Artists, or ACTRA. We represent 21,000 Canadian professional performers working in English language recorded media in Canada. We also have a counterpart in the province of Quebec, the Union des Artistes, which also represents performers whose language is French.

    ACTRA is a vocal advocate for the preservation and strengthening of Canadian culture and Canadian creativity. ACTRA plays a leading role in coalitions for the advancement of Canadian cultural programs, and in international bodies working for the protection of cultural diversity in a global economy. ACTRA has taken a principal role in the advancement of performers' rights in the process of copyright reform, both domestically and internationally with our international organization, FIA.

    Thank you for giving Canada's performers the opportunity to speak to you today in these consultation hearings about the important issue of the government's agenda for copyright that goes to the heart of protecting our cultural expression and our national identity.

    If we are to achieve our creative promise, artists must be compensated properly for their efforts. A critical element in achieving this objective is the copyright system, which provides both economic and moral rights to creators. A fundamental principle upon which ACTRA bases its representations concerning copyright and performing artists is that since the performer adds value to the artistic work and can give life and grandeur to the work performed, the performer deserves to be protected by copyright.

    We are here today to speak to you about performers' rights and the early implementation and ratification of the WIPO Performances and Phonograms Treaty, the WPPT, and the impact this is claimed to have on the private copying levy in part VIII of the Copyright Act.

    Performers are beneficiaries of the private copying levy through ACTRA PRS, a member of the NRCC. PRS is the performers collecting society that administers the distribution of neighbouring rights remuneration and the performer's entitlement to remuneration from the private copying levy. Therefore any changes to the levy will impact performers who are represented by ACTRA PRS.

    Implementation and ratification of the WIPO Performances and Phonograms Treaty is very important for performers. It has been a very long stretch of time since Canada signed the two WIPO treaties in 1997. As of February 24 this year, 43 states have implemented and ratified the WPPT, and as of March 24 this year, 46 states had implemented and ratified the WIPO Copyright Treaty. These numbers do not include the 15 states of the European Union, which will ratify the treaties as a group in the very near future.

    Canada is now among a shrinking group of developed countries that have neither ratified the treaties nor are in the process of ratifying the treaties. We are well behind the curve in protecting the rights of performers and other creators.

    From the perspective of performers, further delay is detrimental because implementing the WPPT would provide performers with the necessary legal rights that they now do not have in their fixed audio performances.

    A performer does not have an exclusive right to negotiate the reproduction of his or her fixed performance unless it is to be used for a purpose other than that for which the performer authorized the fixation in the first place. Implementing and ratifying the WPPT would give performers the full reproduction right that could be exercised against third parties that are using the reproduction for the purpose it was made, but without the authorization of the performer.

    We would also like to take this opportunity to note, for the benefit of the committee, that it is equally important that performers are compensated for their existing fixed performances. It is critical that the new rights of performers added to the Copyright Act by implementation of the WPPT apply to all performances, so there will be retrospective protection of all performers' performances protected by copyright. That means retrospectively for 50 years from the date the WPPT amendments are proclaimed into law.

À  (1030)  

    Performers' work is a serious creative profession that deserves to be treated with the same legal rights as other creative contributors. The structure of the audio recording industry dictates that as a rule, performers shift from one employment to the next, and may often have to endure long periods without work when they often receive no compensation. Performers have little individual bargaining power; therefore they must have the economic right to authorize or prohibit each and every use of their work. Performers want to be able to negotiate with producers about the terms on which their creative work could be exploited now and in the future in the worldwide digital marketplace.

    Performers will also benefit from the making available right that would be added to the Copyright Act in the process of implementing the WPPT. This new right would be particularly important for performers to exercise for the digital transmission of their performances via the Internet. There are other rights, such as the distribution right, where the term of protection would be increased for performers. There would be technical protection measures and rights management information that would protect performers.

    In addition to economic rights, performers would also need to protect the integrity of their work and be identified with their performances. A performer's essence is defined by his or her performance, and it is essential that the performer has a legal right to maintain and prevent the misuse of his or her performances.

    Moral rights or rights personal to the artist have long been available to authors in article 6bis of the Berne Convention, of which Canada has been a member for many years. This article provides protection against any misuse of artists' creations that may prejudice their reputations. The moral right established in article 5 of the WPPT was a groundbreaking precedent for performers in their audio recordings and stands as a template for moral rights in audiovisual performances. The WPPT would also add a moral right in a performer's performance to the Copyright Act, something that's now missing.

    The private copying regime would not be affected by the national treatment obligations of the WPPT. The private copying regime compensates performers, authors, and producers for non-consensual reproductions by individuals. This means that performers, authors, and producers do not exclusively exercise their rights in respect of private copies, but rather are remunerated for those reproductions.

    We do not believe that private copying levy provisions in the Copyright Act need to be amended to ratify the WPPT, as the levy is a form of remuneration payable to authors, performers, and producers because their right of reproduction could not be practically exercised through licensing or via enforcement for infringements by individuals making copies for their own use.

    Article 4 of the WPPT treaty requires national treatment with regard to exclusive rights specifically granted in the treaty and to the right of remuneration for broadcasting and communication. Therefore, remuneration paid to rights holders as compensation for private copies would fall outside the national treatment provision of the WPPT.

    I'm going to close with a few comments about why the WPPT is ultimately necessary for performers. It is a template for amending the Copyright Act to update performers' rights in audiovisual fixations, such as television, film, and digital media. Since the Rome Convention was concluded in 1961, audiovisual rights have been exploited more and more through an increasing variety of channels, the development of digital technology, the huge reach of the Internet, and the mass convergence of company ownership in the international media and entertainment sector. Each of these generates potential revenue, sometimes a long time after the fixation.

    The global reach of digital communications and new media applications makes it increasingly difficult for performers to rely on contractual provisions alone, without underlying rights in copyright to bolster their agreements with producers of audiovisual works. Internationally recognized rights of performers in their performances in audiovisual media would not only assist performers to access royalties from third parties but would permit performers to enforce protection of their performances fixed in audiovisual media against piracy and unauthorized manipulation.

À  (1035)  

    I've asked the clerk to supplement this oral presentation with some documentation from the WIPO secretariat. This survey covers legislation from 97 countries that provide protection for fixed audio performances. You will note that Canada is not included in this survey. The Copyright Act does not provide any of the protections for performers in audiovisual works that the other countries surveyed do.

    Ratifying the WIPO treaties now will provide a first step so we can move forward to provide rights for performers in audiovisual works. On that basis, we think it's very important for this committee to send that message.

    Thank you very much for providing this opportunity for ACTRA to voice its concerns. I welcome your questions and look forward to the discussion.

    The Chair: Thank you very much, Mr. Thompson.

    Last but not least is Lyette Bouchard, assistant executive director, Association québécoise de l'industrie du disque, du spectacle et de la vidéo.

[Translation]

    Ms. Lyette Bouchard (Assistant Director General, Association québécoise de l'industrie du disque, du spectacle et de la vidéo (ADISQ)): Good day, ladies and gentlemen and members of the committee.

    First, I thank you for having asked us to appear in order to have an exchange of ideas on the stakes of this important public process.

    Before adressing the matters on today's agenda, I'd like to briefly introduce ADISQ.

    For 25 years, ADISQ has been representing the Quebec producers of discs, shows and videos. These Quebec independent producers produce over 95% of all albums put out by Canadian artists in the French language. Twenty-five years ago, ADISQ's activities consisted mainly of producing its own gala, but for the last 15 years our activities have become very diversified. We are active more specifically in the fields of radio broadcasting, funding businesses, labour relations, training, and, of course, copyright.

    I believe that just like all our Canadian colleagues in the music industry we were important actors in the latest restructuring process of the Copyright Act, a long 10-year journey that ended in 1997. So it is as representatives of the Quebec independent producers interested in the evolution of intellectual property rights in Canada that we are here before you today.

    ADISQ wished to be heard today because it considers that this hearing is of major importance in the review process on the Copyright Act that is going on at this time, and more specifically in the context of extremely rapid advances in the field of technology allowing the unauthorized exchange of music files. In this regard, it must be emphasized that in 1999 three billion music files were exchanged on free websites while in 2003 this figure had gone up to 150 billion.

    In the context where Canada's record market represented $1.3 billion in 1999 and is only worth a bit more than $900 million today, you'll allow us to feel worried, very worried. Of course, this huge decrease in the record market is not only due to piracy but also to the general economic situation and the offer of more varied entertainment. Still, during the last year, during every hour of the day and night, 5 million people were using the free music file exchange sites.

    ADISQ is of the opinion that to stop piracy there are many solutions that must be looked at and amongst them are such things as public awareness campaigns concerning the value of music and the adverse effects of piracy, such as the campaign undertaken by ADISQ during the Valentine's Day period. In our opinion, the solution also involves the development of business models such as legal on-line sale sites for music and a change in the Copyright Act.

    As for copyright, as that is what is being discussed here today, according to the discussions being held between ADISQ and the different stakeholders in the music sector, it does appear that they have agreed to support unanimously and without reservations all the amendments that need to be made to the Copyright Act in order to allow the ratification by Canada of the WIPO Internet treaties.

    ADISQ will therefore limit its comments to the following.

    First of all, ADISQ fully supports the position defended earlier by Counsellor Brunet, representing the CPCC, concerning the impact that the ratification of the WIPO Treaty on Neighbouring Rights will have on Canada's private copy regime.

    Second, we would like to discuss the provisions of this treaty concerning the right of making available sound recordings to the public, technical protection measures and finally information on the copyright regime.

    In the opinion of ADISQ, those measures are an interdependent web whose common objective is to allow sound recording producers to regain minimum control, in the Internet context, over the use of their sound recordings, while respecting the traditional balances underlying the WIPO treaties in the area of copyright.

    In ADISQ's opinion, the adoption of legislation to implement those three components of the Treaty on Neighbouring Rights is a strict minimum in order to ensure that the rights of the artists and the producers will stop being disrespected with impunity over the Internet in Canada. We are dealing with those three points more specifically because we consider they are the most important for the sound recording producers. It is not that we are not interested in the other elements of this treaty but we don't have much time today.

    First, let's talk about private copies. We've just heard Counsellor Brunet. ADISQ fully supports his position and claims it for itself. For the reasons expressed by Mr. Brunet, ADISQ is of the opinion that no amendment has to be brought to the private copy regime as it presently exists in the Copyright Act, given the ratification of the Treaty on Neighbouring Rights, more particularly as concerns the absence of any obligation of national treatment to the benefit of foreign artists and producers.

    ADISQ also wishes to reaffirm the importance of the beneficial effects of the private copy regime for Quebec sound recording producers, especially since ADISQ, let's not forget it, fought for this regime side by side with its partners in the Canadian music industry for over 10 years.

À  (1040)  

    With respect to the Neighbouring Rights Treaty, the international community reached a consensus on the need to recognize a right to authorize or prohibit the act of making sound recordings available in order to manage access to sound recordings on the Internet.

    As it currently stands, the Copyright Act recognizes only the right to fair compensation, particularly to producers, for making their sound recordings available to the public through electronic means, and it does not include any provision allowing producers to control the use of their recordings in the Internet context.

    The Neighbouring Rights Treaty therefore requires member countries to give artists and producers of sound recordings the right to authorize or prohibit their performance or recordings being made available, thus allowing individualized access wherever and whenever people want it.

    Although some consensus seems to have developed in Canada around the idea that the right to communication via telecommunications includes the right of access, the ruling by Mr. Justice von Finckenstein on March 31, 2004, that this right did not exist in Canada is ample reason, in ADISQ's view, to add a very specific clarification to this effect in the Copyright Act.

    Moreover, this clarification is essential to ensure compliance of the Copyright Act with the Neighbouring Rights Treaty, which requires that a distinction be made between communications that are requested, for which the treaty requires the acknowledgment of a right to authorize or prohibit, and communications that are not requested, for which artists and producers have only a right to equitable remuneration.

    ADISQ therefore urges the government to amend the Copyright Act as quickly as possible in order to give producers effective control over the on-line use of their sound recordings. We would emphasize that this right is essential for the managed use of sound recordings on the Internet, and the uncertainties that led to the emergence of entities like Kazaa and Morpheus must be eliminated. ADISQ is of the view that it would be inconceivable for this issue to be omitted from the first amendments required to the Copyright Act to adapt it to the digital era.

    On the question of technical protection measures, ADISQ believes that these means of preventing copyright violation are becoming absolutely necessary on the Internet. In our opinion, respect for copyright on sound recordings is practically impossible to ensure on the Internet under the traditional copyright regime. The facts clearly show that the ease of access and low cost of reproducing or otherwise using sound recordings on the Internet necessarily and invariably lead to mass illegal copying, with the only moderating factor in Internet sound recording piracy being the popularity of the recording at a given time.

    Neutralizing technical protection measures generally requires a certain level of expertise, which, fortunately, only a minority of experts possess. Preventing those experts from developing tools and methods to neutralize technical protection measures would prevent widespread distribution and use. To achieve this result, it is vital to adopt legislative measures to discourage the development and circulation by these experts of tools and methods to neutralize technical protection measures.

    For that reason, ADISQ fully supports the adoption of measures meeting the requirements of the Neighbouring Rights Treaty, that is, provisions prohibiting actions to neutralize technical protection measures aimed at preventing copyright violations, as well as actions involved in the creation, importing, sales, rental, offering or displaying for sale any means of neutralizing these protection measures.

    Finally, the Neighbouring Rights Treaty requires signatory countries to adopt appropriate and effective legal sanctions to deal with certain actions taken with respect to information in the context of the rights regime applying to a sound recording, insofar as these actions could lead to, permit, facilitate or hide a copyright violation covered by this treaty.

    When the information in question is provided by the owner of the sound recording, its prime purpose is to facilitate management of the recording's use on the Internet and thereby to facilitate access to the sound recording and its circulation and use. As a corollary, the information prevents copyright violations by clearly establishing the parameters of authorized use for these works and other productions covered by copyright.

À  (1045)  

    ADISQ is of the opinion that in order to ensure the on-line management of copyright, it is necessary to ensure the integrity of the information surrounding that management that might be linked to sound recordings by adopting efficacious provisions to fully implement the Treaty on Neighbouring Rights.

    Thank you very much.

[English]

    The Chair: Thank you.

    We'll now start our first round of questioning. We'll start with Mr. Abbott, and then Monsieur Sauvageau.

    Mr. Jim Abbott (Kootenay—Columbia, CPC): Thank you.

    I'd like to address my questions to Mr. Brunet. I recognize him from our endless hearings in 1997 on Bill C-32, of course. You may not recall that I was on record at the time that Bill C-32 was in debate, particularly in committee, questioning the whole issue of national treatment. I would suggest that it's counter-intuitive. Not being a legal person--I am not a lawyer at all, and maybe that's to my benefit; I don't know. The point, nonetheless, is that it's counter-intuitive, to my mind.

    In Bill C-32, when the new provision of neighbouring rights was brought into effect...my understanding is that the levies that accrue from application of neighbouring rights are payable to people who are from countries that have signed on to the Rome Convention. Clearly, within Bill C-32, which also brought the private levy into effect, on one hand, the legislation that provides for payment to people who have signed on to the Rome Convention for neighbouring rights is silent on the issue of payment on the issue of private levy.

    To make my point, you have suggested that the European countries—if I understood your testimony, because I didn't do a good job of writing it down—are not going to be going after each other. In other words, that's within the European group on this basis. What is to stop the United States, which after all is the largest producer of these materials, from coming after us for those levies?

    I put those two questions to you. On one hand, under neighbouring rights as enacted under Bill C-32, we have very distinctly a provision for those fees to be distributed to those who have signed on to the Rome Convention, but not on these private levies. Secondly, as part of that, although you use the example of European to European, you seem to be silent on the issue of the U.S. possibly coming after Canada.

À  (1050)  

    Mr. Claude Brunet: Mr. Abbott, you're quite correct in identifying a difference of treatment in international law between what you referred to as neighbouring rights. Incidentally, in Canada it is no longer a correct way of referring to the rights of performers and the rights of makers.

    The right that makers and performers get under the Copyright Act is copyright; it is truly copyright. It's not copyright that is as complete as it should be, and this is what you heard from Mr. Thompson and Madame Bouchard, but it is copyright. You now have under the Copyright Act in Canada the rights of authors and composers, the rights of makers of sound recordings, and the rights of performers.

    But at the time the discussion was going on around Bill C-32, we were referring to the so-called group of rights as “neighbouring rights”. These rights referred to as neighbouring rights were the right to communicate the performance or the sound recording by communication. Internationally this right, when it is given to performers and makers, is subject to certain rules and certain permissions countries have with respect to whether they will grant the protection to foreigners.

    You're quite right that under the Rome Convention that regime is not the same as the right of equitable remuneration for private copying. What the Rome Convention and the WPPT do is give us much more room to manoeuvre in and not provide national treatment for the private copying regime. That's for your first question.

    Your second question is, what have the Americans asked for? Well, they're bound by this international committee, “committee” in the sense of arrangement international. They too, being signatories and having ratified the WPPT, fall under what I've been saying from the beginning: there is no national treatment necessary for the private copying regime.

    European countries are bound to give it to one another through the Traité de Rome, the European Community treaty, but not through the WPPT, and they carved it out in that fashion. They say that within Europe they will exchange it amongst one another; outside of Europe nobody gets it because the WPPT does not force them to give it to foreigners.

    Canada, in ratifying the WPPT, would not have to grant this protection to the United States. It's as simple as that.

    Mr. Jim Abbott: On March 24 we received an interesting document submitted to the Standing Committee on Canadian Heritage by the Minister of Canadian Heritage and the Minister of Industry; it is called the “Status Report on Copyright Reform”. On page 7 of that document, paragraph 31, it says “This levy is paidout to authors (songwriters and composers) regardless of their nationality,”--that's referring to the copyright--“but only tosound recording producers and audio performers who are Canadian.”

    So I'm afraid I can't agree with your position, if it is the following, and I just need confirmation from you: you're basically saying that within any future free trade agreements, however they might be titled, we could go ahead and under those agreements treat our sound recording producers and audio performers who are Canadian in a totally different way from the way we treat other people who are selling product into our marketplace. Is that your position?

    Mr. Claude Brunet: Notice here, Mr. Abbott, the shifting of the problem. Initially, according to Mr. Knopf, the problem was with the WPPT. This morning we're hearing that it may be in the negotiation of a future trade agreement.

    If this committee is seized with the question of whether the WPPT forces us to make an amendment to the private copying regime or whether, if no amendments are brought to the private copying regime, we may not join the WPPT, I'm saying this is wrong. Whatever Canada negotiates in the ZLÉA or in any other trade agreement is for Canada to negotiate at that time, but we are not now bound by the WPPT to provide national treatment for the right of equitable remuneration when the performances of performers and the sound recordings of makers are privately copied in Canada.

À  (1055)  

    Mr. Jim Abbott: Thank you.

    The Chair: Monsieur Sauvageau.

[Translation]

    Mr. Benoît Sauvageau (Repentigny, BQ): Good day, ladies and gentlemen.

    My question is for Mr. Brunet, but if others also want to answer, do feel free.

    I much appreciated the clarity of your intervention. I'm a neophyte because I'm replacing a colleague on this committee. Your recommendations concerning those international agreements were concrete, specific and clear.

    You said that you, just like the other intervenors, have been working for many years with the various Canadian government negotiators. During the negotiations that are ongoing at this time, are the recommendations you are suggesting backed by Heritage Canada? Are they also shared by Industry Canada? Is everyone travelling down the same road to arrive at a common agreement or are there differences between the different departments or between your position and that of the main negotiators?

    Mr. Claude Brunet: First of all, to be quite candid, Mr. Sauvageau, I will say that I am not personally negotiating either with Heritage Canada or Industry Canada.

    Of course, through my client, the CPCC, I am kept up-to-date on what the members of the CPCC are trying to get from those two departments. I would say that what I can see from where I stand was expressed very correctly, I believe, by Mr. Lincoln during one of the meetings of this committee. You said, Mr. Lincoln, that there was clearly a difference in approaches between Heritage Canada and Industry Canada in the sense that one of the departments is favourable to collective management while the other one prefers exceptions to the law. So I don't think I'm telling tales out of school when I say that the two departments don't see things quite the same way.

    As the private copy regime is a collective management regime of copyright, I must necessarily come to the conclusion that Heritage Canada is more favourable to the private copy regime than Industry Canada might be.

    Mr. Benoît Sauvageau: Thank you.

[English]

    The Acting Chair (Hon. John Harvard (Charleswood St. James—Assiniboia, Lib.)): That's it?

[Translation]

    Mr. Benoît Sauvageau: Yes.

[English]

    The Acting Chair (Hon. John Harvard): Thank you.

    I guess we go to Mr. Bonwick.

    Hon. Paul Bonwick (Simcoe—Grey, Lib.): Thank you, Mr. Chair.

    I should mention, actually, before I go into my questioning--and I apologize if I missed this, Mr. Knopf--that I had a meeting this morning prior to this one with the Canadian Association of Broadcasters. I'm not sure if you qualified that...and I mentioned it to the clerk as well. The Balanced Copyright Coalition stated quite clearly when they were looking at the agenda that you were not here representing them; in fact, it was their understanding you were not here representing the copyright coalition as well. Is that a fair statement?

    Mr. Howard Knopf: Could you repeat the question?

    Hon. Paul Bonwick: It was a statement that was brought forward to me this morning when I was dealing with representatives from CAB. They stated that you were not here representing them or the copyright coalition. Is that a fair statement, just for the record?

    Mr. Howard Knopf: I don't know what the copyright coalition is. The Canadian Association of Broadcasters is a member of the Balanced Copyright Coalition.

Á  (1100)  

    Hon. Paul Bonwick: I meant the Balanced Copyright Coalition.

    Mr. Howard Knopf: CAB is a member of the Balanced Copyright Coalition. I stated--I hope--quite clearly--

    Hon. Paul Bonwick: And I may have missed it.

    Mr. Howard Knopf: It's possible.

    I stated that I believe my views are consistent with written communications that have been sent to this committee and elsewhere from the BCC, of which CAB is a member. But I also made clear that I'm here speaking in my personal capacity. Whatever I say doesn't necessarily stick to any of the individual members of the BCC, although I don't think I said anything the CAB would disagree with. If they do, they're free to let you know.

    Hon. Paul Bonwick: As I said, I may have missed it, and I certainly apologize for that.

    In October 2002 the department produced a document, “Supporting Culture and Innovation”. This laid out a tentative work schedule for this committee, and as part of that, it lumped things into three different baskets. At that time I thought it was a well thought out work schedule, something the committee bought into. In dealing with these baskets, it asked the committee if it would consider becoming involved in helping the government ratify the WIPO treaty. In the medium-term basket they very clearly separated the private copy regime and said it was something that would be dealt with down the road, something that would require an extensive review in itself, but on the ratification side, it's not necessarily relevant.

    I think all the speakers have clearly articulated that there may be some significant problems, there may be some inconsistencies within the private copyright regime. I think there's an opportunity for this committee or future committees to review this extensively and maybe get it right. But for the purposes of this committee, it was my understanding that we were coming together to ask whether the private copyright regime as it exists today is an impediment to ratification. Does it in some way stop us from ratifying? The Committee of the Whole, along with the government, apparently wants to ratify. What we want to do as a committee is identify things that would impede us from doing that.

    So I would like some very clear statements. If it is an impediment, how is it an impediment? Beyond that, if it is believed to be an impediment, who would challenge us and how would they do it? We can move around the table on that.

    Mr. Howard Knopf: Who would challenge us? I doubt that it would be the CPCC; they can't launch a trade challenge. It won't be CRIA; they can't launch a trade challenge. The scenario is very simple. The WPPT has no effective dispute resolution mechanism in it, but when, not if, we are required by our friends to the south to join the free trade area of the Americas, the FTAA, that agreement will require us, based on numerous bilateral precedents to date and on all the draft texts of that agreement, if we haven't already done so, to implement and ratify the two WIPO treaties.

    Hon. Paul Bonwick: With all due respect, Mr. Knopf, I'm not trying to be an idealist, but I hope it would be Canada's decision as to whether or not they become ratifiers of free trade agreements, not instructed by the U.S.

    Second, we're dealing with a hypothetical. What we're dealing with today--and I'm interested in hearing the other witnesses provide comment--is the question of whether there is an impediment. Is the private copyright regime an impediment to ratification today? If it is, what is the mechanism for the EU, for countries within Europe, the United States, whoever, to challenge us on it?

    Mr. Howard Knopf: If I could finish on that point, the answer is yes. We have to provide national treatment. You don't have to believe me, you can believe Dr. Ficsor, who knows more about this than anybody. See page 614 of his book, of which I've given you the excerpt. Dr. Ficsor is independent on this. He was not hired by the CPCC or CRIA to furnish an opinion for consideration. This is an independently written book, and he is the authority on the matter. He's very clear. It has to be dealt with on a national treatment basis. Our law does not conform with that.

    If you hypothetically want to put us on the line to give away hundreds of millions of dollars, as the Copyright Board said, that's a policy decision for the government. We can ratify the treaties and wait for the trade challenge, which will come not from Mr. Brunet's organization, but eventually and inevitably from the United States government. Then we will have lost all sovereignty and will have to pay. Of course we can refuse to sign the FTAA; then our farmers won't be able to sell beef, and we will pay dearly for that exercise in sovereignty.

Á  (1105)  

    The Chair: Mr. Brunet.

    Mr. Claude Brunet: You heard it from Mr. Knopf.

    First, there is no dispute settlement mechanism in the WPPT. If he was right about the fact that we have to provide national treatment on the private copying regime, and we didn't, there is no dispute settlement mechanism. We have to wait until some other treaty is negotiated for something to happen there. Even in his best-case scenario, there is no impediment to signing the WPPT. The basic fundamental principle is that there is no need to extend national treatment to the private copying regime.

    For two years now Mr. Knopf has been touting this beautiful book by Dr. Ficsor. He would be lost trying to explain to you what it is Mr. Ficsor is saying. I hope you will read his excerpts, but also read the connecting pages to the excerpt he has given you. You will find that it does not lead us to the conclusion Mr. Knopf wants us to believe.

    The real conclusion is in another book on treaties. It's a very small paragraph, if I may enter it into the record, Madam Chair:

The reference to 'exclusive rights' in Article 4(1) WPPT indicates that any statutory rights to remuneration, even if they are derived from exclusive rights mentioned in the WPPT, are not covered by the national treatment obligation. As an example, Contracting Parties which have established in their national law rights to remuneration for private copying are not obliged under Article 4(1) WPPT to grant nationals of other Contracting Parties national treatment with respect to these rights....

    That's the bottom line.

    The Chair: Mr. Brunet, what are you reading from?

    Mr. Claude Brunet: I'm quoting from the WIPO Treaties 1996 written by Jong Reinbothe and Silke von Lewinski. It's a treaty on the treaties. This is clear. This is much clearer than whatever comes out of Mr. Ficsor's beautiful intellectual creations.

    Now, I would like to take the opportunity, if I may, Madam Chair, to address what is seen to be the problem. When Mr. Knopf says that national treatment is a disaster, if we should have to grant national treatment, what does he have in mind? He told us that it is a very rich levy collected in Canada that would all go out of the country. May we have a reality check here, please? When Mr. Knopf talks about the private copying levy, he says it is $100 million. What he forgets to say is that it's over five years. When Mr. Knopf considers national treatment being extended to everybody in his scenario, he says it is hundreds of millions of dollars more, plural.

    For the fun of it, CPCC calculated what it would mean if national treatment was extended to everybody. We come to an additional $30 million coming into the CPCC, not going out of the country. Once you've calculated all of the arrangements among different collectives, all of the administrative fees, if we had to grant national treatment, in the end, we would be talking about something in the order of $15 million to $20 million a year. This is on the wrong basis that the WPPT compels Canada to grant national treatment to the private copying regime. This is the ox that is being gored, according to Mr. Knopf.

    I come from an industry that usually says it works on hype. I suggest to you that the hype is all on Mr. Knopf's side today. There is no need to convey national treatment, to offer national treatment. Even if it were so, the amount would be minuscule.

Á  (1110)  

    The Chair: Briefly, Mr. Thompson, and then I shall have to move on to Mr. Lincoln.

    Mr. Ken Thompson: I was only going to add that the initiative of the last Minister of Heritage was to pursue a treaty for cultural diversity. It's something nobody here has mentioned, though I briefly alluded to it. That would be the appropriate forum in which to protect our cultural interests here in Canada, not by restricting or holding up the WPPT ratification any further. I encourage this committee to stand behind the cultural diversity instrument. That's where protection of our cultural and national identity should be.

    The Chair: Mr. Thompson, just for the record, it was not just the former Minister of Heritage, but in the Speech from the Throne the government made a commitment to pursue the international instrument on cultural diversity. So it has been reaffirmed by this government.

    Mr. Lincoln.

    Mr. Clifford Lincoln (Lac-Saint-Louis, Lib.): I must say, I share Mr. Thompson's view. When I heard Mr. Knopf, I was thinking about the instrument on cultural diversity as the answer.

    I feel a bit like Alice in Wonderland every time I come to a copyright hearing. Our job is to try to find out how we can get to ratification. As Mr. Bonwick was trying to find out, what are the impediments today, according to you, the experts who work on this every day? The irony of this thing to me as a lay person, as with Bill C-32 and the dichotomy that existed then, is that as Mr. Brunet was saying, you're talking about two positions, one backing the collective system, the other one looking for exceptions, in other words, commercial interest versus cultural interest. It's always the problem.

    We come to hear you who work with this every day and are far more expert than we are, and we find the same dichotomy, Mr. Brunet and Mr. Knopf, and then we've got to say, which is right, which is better? We are always back to square one. How can we, who are supposed to make recommendations and know less than you do, suggest a consensus, when you who are the experts and the ministry people are subjected to this constant tug of war as to which one is right, which one is wrong? We feel lost in there, because there are always two options. You say A is better than B, and who knows? The experts themselves don't know.

    I was wondering if you could tell me, those of you who have studied this, have looked at the status report presented by the two ministries, which again puts out the same differences of opinion between the industrial side and the cultural side, what you recommend to us, to follow up what Mr. Bonwick was suggesting, as the quickest way to ratify and to avoid this tug of war that's going on.

    Mr. Claude Brunet: I would offer to you, sir, two guiding lights. First, when the head of the Canadian delegation that negotiated the WPPT and whether national treatment should or should not extend to the private copying regime came back in 1996, the problem was solved. It was negotiated internationally and the treaty was signed. That's number one. Danielle Bouvet does say that. Second, let's look at what the rest of the world is doing. Europe is signing up, ratifying the WPPT, and is not extending national treatment to the private copying regime. That should be comfort enough.

    What should your committee do about it? I would come back to the hopes I expressed at the end of my presentation. You should take notice officially of the fact that there is nothing in the WPPT that forces Canada to modify its private copying regime. It's a wish of Mr. Knopf, but there is nothing in the WPPT that forces Canada to modify its copying regime. You should say that officially, hopefully in an interim report. Second, you've heard the people coming from the music industry, and they say we need the WPPT urgently. Therefore, you should, hopefully, in your interim report say Canada should now proceed with ratification.

Á  (1115)  

    Mr. Clifford Lincoln: Could I ask a brief--

    The Chair: Mr. Knopf, I think, wants to reply.

    Mr. Howard Knopf: I don't necessarily accept that there is an urgency in ratifying and implementing these treaties, but if that is the will of Parliament, so be it. The solution to the problem is very simple: get rid of the private copying regime, repeal it. Then you can proceed, I hope with great caution, on the rest of the package. The rest of the package is far from innocuous, but that's a discussion for another day. We can get rid of the national treatment problem by getting rid of the levy.

    Once again, we don't have a full deck of information about what's going on in Europe. Many of the European countries that have levies treat them rather differently, as taxes that aren't even subject to copyright national treatment rules. We shouldn't be looking at the European countries for a precedent on these matters. Their legal system is very different from ours. If we're going to look at a precedent, let's look at the United States, which has a tiny levy called the digital audio recording--I can't remember the rest. It's on mini disks and a very restricted list of media, and it generates about $3 million or $4 million, in contrast to the more than $50 million that's being generated in Canada. By the way, the $50 million my friend unsuccessfully tried to double to more than $100 million, and the doubling in turn from national treatment is a simple arithmetic calculation. If we had the time, I could show you. We should not be looking at Europe, we should be looking at the United States. To date we have received from the United States in our best year from their levy scheme the princely sum of $2,600. That's money flowing north, whereas of the $50 million or so a year we're getting in Canada, most is flowing south. When it doubles, as it will eventually, it will almost all flow south.

    Again, haste makes waste. The reason we have this problem we're talking about today is the revisions in 1997, especially of part 8 of the Copyright Act, which were done in haste, without thought. Madame Bouvet may have thought she was right at the time, but unfortunately, her opinions don't bind the Canadian government, much less the American government. So haste makes waste. If you're going to do something hasty, hastily repeal part 8 of the Copyright Act.

    Mr. Clifford Lincoln: I wanted to ask Mr. Thompson and others if they think it's realistic to buy a theory of cancellation of the private copyright regime in order to ratify. Do you think this is going to be realistic and is able to be sustained?

    Mr. Ken Thompson: Back in, I believe, 1995 or 1996--I can remember being in front of the committee at that time, when Mr. Lincoln was chair--there was discussion of private copying, and it wasn't hasty at all. In fact, I don't think the previous amendment was at all hasty. It took almost ten years to get to Bill C-32, and it seems to me that it's taking pretty close to ten years to get to the WPPT, an inordinate amount of time, because of discussions, many of them red-herring discussions. It's not realistic. If it were, other territories would be doing the same thing. By the way, there are only a few countries in Europe that apply private copying as a tax, and they're in the Scandinavian countries, I believe Denmark and Sweden.

Á  (1120)  

    The Chair: Ms. Bouchard.

[Translation]

    Ms. Lyette Bouchard: Before going further, I'd like to say that it's completely illogical, in my view, after a 10-year battle, to contemplate doing away with the private copying regime. The benefits are just beginning to be felt. It has to be left alone, that's for sure. That's all I can say about that.

[English]

    The Chair: For the next round I have Mr. Abbott, Mr. Harvard, and Mr. Bonwick.

    Mr. Jim Abbott: It strikes me that one of the unintended consequences of the private copy regime resulted in the decision that von Finckenstein arrived at just a few weeks ago. He undoubtedly had to take into consideration the fact of the private copy levy. Having taken that unintended consequence into consideration, it undoubtedly ended up colouring his decision overall. So sometimes I would suggest, with respect, that we have to be careful of getting what we wish for.

    I'm interested that the WPPT doesn't have a dispute settlement provision. Consider our experiences with the softwood lumber situation, where we do have a dispute settlement mechanism, and our non-tariff trade barrier, which the U.S. has set up under the BSE and that Japan has taken full advantage of. These are some of the very harsh trade realities that exist. Consider the position of the U.S. with respect to the steel industry, the harassment of the steel industry, the harassment of wheat producers, and many other cases where dispute settlement mechanisms already exist. Isn't it a little bit cavalier, isn't it a little bit kind of “cowboyish”, for us to think as the individual in your example did, Mr. Brunet, the one who came back from the negotiations and said, “Hallelujah, the problem is solved”? Isn't that just a little bit cavalier?

    We are a sovereign nation, and I'm very proud to be a Canadian, thank you very much. But we do have to take into account the realities in the world of trade. Clearly, the United States is not going to be crazy about seeing its ox continuing to be gored if it feels it is minus money.

    So how would you work with that? You go ahead and implement something, and then you say, but you can't have it and then they come after us, which I think is a pretty predictable thing. How would you go about handling that if you were in the position of the government?

    Mr. Claude Brunet: Well, first I would, I suppose, realize and accept that we are totally in the realm of speculation. You're saying they will come after us. Well, we don't know. There are other occasions--even in the Copyright Act--where the United States could make demands of Canada and are not making demands of Canada.

    With respect to the private copying regime--and as Mr. Knopf himself has said, the minimal, ridiculous private copying regime that exists currently in the United States is so small as to be almost non-existent--the United States would be in a very bizarre position of claiming against the nations of the world to be favoured from real private copying regimes when all it has to offer as a tit-for-tat--I don't know how you say it in English, en contrepartie, as a counterpart--is this measly little protection. So I do think, sir, quite honestly that this is complete speculation and will never actually happen. My own personal opinion is that the United States will not ask first.

    Now, let's also be realistic about what is at stake. As I said, if Mr. Knopf's worst fears should materialize, we're talking about $15 million to $20 million a year worldwide. Will the Americans mount a whole program against Canada for a few million dollars when they themselves do not offer anything in return? I doubt it very, very strongly, sir.

Á  (1125)  

    Mr. Jim Abbott: Well, that's the question. We understand Mr. Knopf's position about deleting the private copying provisions of the current Canadian Copyright Act. Under what circumstances would you consider the levies for the private copy regime being opened up to be paid to the same people who would qualify under the Rome Convention for the copyright fees?

    What I'm basically trying to say is that I accept your information--and, as it were, your correction--about the whole issue of neighbouring rights and the fact that these now form part of the total copyright regime. I accept that and I thank you for that information. It was very valuable. I guess my question is, in the same way that copyright fees can flow out of the country to those countries who have signed on to the Rome Convention, under what conditions would you accept that the same would apply to the private collecting fees?

    Mr. Claude Brunet: Unfortunately, this is predicated on the premise that there would be a movement towards doing that. The truth is that the CPCC is just an umbrella collective that collects the levy and pays it back to its members, with its members being the real associations of the industry, such as the ones represented here by Madame Bouchard and Mr. Thompson. The CPCC is not being asked by any of its members to broaden the regime at all. As a matter of fact, the CPCC is told, “Keep the regime as is”.

    Therefore, your question is interesting, I suppose, in a very intellectual way, but it is not at all rooted in reality, sir.

    The Chair: Mr. Harvard, and Mr. Bonwick.

    Hon. John Harvard: Thank you, Madam Chair.

    Well, I must say that the differences between Mr. Brunet and Mr. Knopf are fascinating. I appoint my colleague, Mr. Lincoln, to reconcile those differences.

    Some hon. members: Oh, oh!

    Mr. John Harvard: I can assure you that on my lousy MP's salary, I don't get paid enough to do that.

    But more seriously, I have one other point, Mr. Knopf. When I was listening to you, it sounded to me as if you were very optimistic about the way the negotiations are going around the FTAA. That isn't what I've heard, which is that the FTAA negotiations are pretty well dead in the water. It may some day happen, but according to the present pace, you're going to have to wait a long, long time. But that's another story.

    Perhaps Mr. Brunet has stolen some of my thunder with his riposte, if I can put it that way. But after listening to Mr. Knopf's very articulate presentation—which Mr. Brunet was taking notes of and shaking his head in the negative—I was going to ask Mr. Brunet whether he had any questions to put to Mr. Knopf. But you've already come back with some counter-arguments.

    But perhaps, Mr. Knopf, you have something else to say. Perhaps you can elucidate on this, as you want to get rid of the levies.

    I come from a creator's background, having spent many years at the CBC, so I will show my bias. I'm on the side of the creators; in fact, for many years, I was a member of ACTRA. It didn't have the same name in those days, but I was a member of ACTRA.

    You talk about repeal of the regime and repeal of the levies. So what sort of a world would you see if you were lucky enough to have a repeal? What would the world look like, and how would you be providing sustenance to those very rich creators?

Á  (1130)  

    Mr. Howard Knopf: I'm glad you asked that question.

    Mr. Harvard, for my sins, I also used to be an artist. I was a professional clarinetist and a proud member of the American Federation of Musicians, which still exists in Canada.

    Hon. John Harvard: There was a lot of music in me, but none ever came out!

    Some hon. members: Oh, oh!

    Mr. Howard Knopf: I used to perform a lot at the CBC as well.

    Mr. Clifford Lincoln: Are you still getting your fees?

    Mr. Howard Knopf: No, alas not, and that's actually the point I was going to make. How would the world change? How would creators be sustained?

    This levy is not doing any good to any real creators. I have yet to hear of any creator who has received a cheque from any of these levies. First of all, very little of the levies have been distributed, and they're going to corporate interests. The way the record industry works is that it pays advances—which are recoupable loans—to some creators, but not to most of them. Theoretically, they may get some money. The very rich and famous musicians may see cheques as a result of this levy, sooner or later, but probably later. Ordinary working musicians, I will go so far as to say, will likely never see a penny of it personally.

    So nothing will change for working musicians, and no other Anglo-American country has anything like this—except for the little tiny thing in the United States. On that, Mr. Brunet and I agree, it is very small. But no other Anglo-American country has this. England doesn't have it, and will never have it. Australia doesn't have it, and will never have it. I don't hear that the music industry has died in any of those countries. The United States doesn't have one, for all intents and purposes, and it rules the world's music industry.

    So getting rid of the levy will not have the slightest effect on creators. In fact, it may help them, because the levy has become a real crutch for the so-called Canadian recording industry.

    Hon. John Harvard: Could I interject, Mr. Knopf, and ask you, wouldn't that assertion of yours perhaps be more credible if it came from the creators and not from the commercial people?

    Mr. Howard Knopf: One of the creators, after the Junos, was asked about the levies. I can't remember who it was, but he had won some award. He said “Well, I have yet to see any money from them”, and he's fairly successful.

    Hon. John Harvard: Do all these people speak for creators?

    Mr. Howard Knopf: No, they don't speak for creators. They speak for corporate interests.

    Hon. John Harvard: Is that true, Mr. Brunet?

    Mr. Claude Brunet: As I introduced myself at the beginning of this committee meeting, I am not within CPCC. Therefore, unfortunately, I do not have the exact figures that probably somebody from inside the organization could deliver to this committee.

    I do know, because I've represented CPCC before the Copyright Board, that we've been before the Copyright Board about every year since the inception of the private copying program. What we presented as evidence before the Copyright Board, in the last round, was that the levy began to be collected after the first decision of the Copyright Board, which was two years or perhaps even three years into the program.

    The levy has been collected. The first two years of the levy have already been distributed. As far as I know, CPCC is in the process of distributing the levies for the years 2002 and 2003, perhaps. It's really the normal gap of an organization getting its wheels in order.

    When Mr. Knopf says that no money has been issued, he is dead wrong. When Mr. Knopf says that only small amounts have been released, perhaps he's right, because it's a pittance to begin with. That's what we're fighting for. There's not enough money in that regime.

    The two first years of the regime were very small levies. When you distribute them across all the rights holders, perhaps, yes, indeed, at the beginning, there was not much money for the individual. It is completely outrageous to say that the levy is not being distributed.

Á  (1135)  

[Translation]

    Ms. Lyette Bouchard: If I might, I would point out, as I said at the beginning, that I am Assistant Director General of ADISQ. However, I'm also Director General of SOPROQ. I didn't come here to speak on behalf of SOPROQ, but I really have no choice, given that SOPROQ is a collective that is part of the CPCC.

    Indeed, SOPROQ has already distributed the private copying levies to its members—in this case, Quebec makers of sound recordings, for 2000 and 2001, and is getting ready to do so for 2002.

[English]

    Mr. Claude Brunet: May I add, Madam Chair, that we are going away from the one issue that is before this committee. As I announced at the beginning, there will be those who will vent their disagreement with the private copying regime.

    Thanks to you, Mr. Lincoln, the cat is completely out of the bag. What Mr. Knopf does not like is having to pay for music. That's the only beef he has. With respect to the WPPT forcing Canada to amend its private copying regime, this is not an issue.

    The Chair: Very quickly, Mr. Thompson.

    Mr. Ken Thompson: I have two things for the record. One, ACTRA is not a corporation. It's an alliance; it's a union of performers. There's no corporation involved.

    Secondly, the issue here is WIPO ratification. This question about private copying is a question being raised that prevents us from moving forward to give performers, producers, and authors better rights to deal with the digital environment. That's the real issue here. For various reasons of Mr. Knopf's corporate clients, he has brought this issue forward.

    The Chair: Ms. Lott, you did have a comment. Since you haven't had a chance to respond, please do.

    Mrs. Susan Lott: Thanks very much.

    I wanted to say that it's important to remember here that all these levies that we're talking about at this intellectual level are being passed on to end users. It's really important to understand that there are consumers at the end of all this who are paying for this, despite, as I said before, whether they're actually using this for copyright reasons or not.

    The problem with the levy is that it doesn't act in isolation with other aspects where we're being pressured to ratify the treaties. Those other aspects, the legal protection for technological measures, can really have an important effect on whether or not that space for private use, which is created by that levy for users, gets protected or not. The legal protection for technological measures, and other things that I know we're not discussing today that are all part of the push to ratify and the effect of ratifying, could effectively nullify the space that is actually provided by the levy for private use.

    The Chair: Mr. Bonwick.

    Hon. Paul Bonwick: My first question is for clarification for the committee's purposes. I'm wondering if the researcher can provide that to us either now or in the next day or so.

    Mr. Knopf has suggested that $15 million a year or so is going in or being collected, and most of that money is heading south of the border. Is that an accurate number and an accurate statement? Can you provide us with information?

    Mrs. Sam Banks (Committee Researcher): I'd have to get back to you on that. I simply don't know at this point.

    Hon. Paul Bonwick: There seems to be a great discrepancy in the amount of money we're talking about. One is saying hundreds of millions and one is saying just over $10 million. So I'm interested in some clarification from our researchers on what the actual number is. We've heard both of your perspectives.

    Mr. Knopf, I'm getting confused. We have to rely very heavily on witnesses' testimony because, as Mr. Lincoln said, we are not experts. So you would have this committee believe that these people sitting in front of us are representing the corporations--and I think you were suggesting or implying U.S corporations--yet Mr. Thompson and Ms. Bouchard are saying this is completely untrue. They are not representing corporations. I'm sitting here wondering how you can have that kind of discrepancy within your testimonies.

    Now let's just assume that this committee or the government is actually challenged with the responsibility of supporting the Canadian music industry. If we work on that assumption and look at the most recent court decision that came out, we are clearly informed that we are not doing that. We are not providing the protection or support for our music industry that other countries clearly have.

    So I'm wondering if you might comment individually on the impact of not ratifying in the next arguably few months. What impact is that going to have, based on the recent court decision? I'm moving the copyright regime right out of it because I'm hearing that we do not have to consider that as we ratify. I'm talking about the ratification process and what it means to your creators, to the music industry in general, if we do not ratify. What will the impact be?

Á  (1140)  

    Mr. Howard Knopf: Are you addressing me, Mr. Bonwick?

    Hon. Paul Bonwick: I'm addressing the discrepancy in opinion and the polarization of opinion when you say big corporations and they say you're wrong.

    Mr. Howard Knopf: First of all, let me clarify--because it was a good question--about the $50 million, the $15 million, and the hundreds of millions of dollars. From the last figures before the Copyright Board, in 2002 the levy was generating about $32 million a year. That was the Copyright Board's estimate. I think it came in at around that.

    If I mentioned a figure of $50 million a year I was extrapolating that because of the great increase in sales of these products since then, I wouldn't be surprised if it was pulling in about $50 million a year. But because of the lack of transparency and the fact that we aren't into a new hearing yet, we don't really know. I'm guessing it's around $30 million, $40 million, or $50 million a year. It might even be more. If it doubles, you can do the arithmetic as well.

    The arithmetic is also set out in another document I furnished to the clerk, which I didn't get a chance to reference. It's a report by Dr. Rushton dated January 20, 2003. This is the Rushton report that should be read carefully and not the one he did earlier that needed clarification because he was not given full information by the department. This sets out the arithmetic of national treatment in great detail by an independent economist.

    As to the corporate interests involved, by their own admission the members of CRIA account for 95%--they're very proud of this--of the record sales in Canada. In turn, almost all of that derives from the five major record companies, none of which is Canadian. That's where the corporate interest comes through.

    You all read the newspapers. The real enemy of songwriters and performers, in many of their views--they're afraid to talk, but many of them are still talking--is not kids downloading from the Internet; their real enemy is their record company. That's where the real problem lies.

    The Chair: Mr. Brunet.

    Mr. Claude Brunet: First, I should correct again

[Translation]

the kind of impression Mr. Knopf is under. Mr. Knopf operates largely on the basis of impressions.

[English]

    The figure that is going to be collected in 2004 by the CPCC is expected to be under $30 million. He's talking about $45 million or $50 million because the world is changing. That's the way he treats all the issues here. I hope the committee will see clearly through that. His problem is that he does not want to pay for the music.

[Translation]

    The Chair: Ms. Bouchard, would you like to respond?

    Ms. Lyette Bouchard: I missed the... [Editor's Note: Inaudible]... Mr. Knopf, and that's too bad. He talked about the record companies. What I basically wanted to tell you was that not ratifying the treaty would be disastrous for record producers, and here, I'm speaking on behalf of ADISQ producers. I'd just like to remind you of the figures that I presented at the outset: 150 billion files are exchanged on free sites, and record sales have fallen significantly, by 28% since 1999, and that is quite alarming.

    The making available right would be and is essential to us, in the age of Internet, to regain control over sound recordings. If I remember the question correctly, you asked what the repercussions of not ratifying the treaty would be. It would make it impossible for us to have control over our business.

    This is essential to us, and that's why we say that it is urgent for the government to act. We need this clarification. You referred to the recent judgment in the CRIA case, to use the language of the people in the business. It is becoming increasingly urgent to proceed with ratification so as to clarify the situation.

Á  (1145)  

[English]

    The Chair: Mr. Lincoln.

    Mr. Clifford Lincoln: I must say I'm glad we've had this session today. I think Mr. Knopf has been very frank about it. It's a question of whether we get rid of the copying regime or not. At least now we know what the main arguments are, from the point of view of the people Mr. Knopf represents, which is really helpful.

    There was one issue you raised, Mr. Knopf, that I wanted to get some comment on because it reminded me a bit of Don Cherry. The Anglo-American world has one philosophy and the rest of the world has a different philosophy. I think that's important for us to understand.

    Does Mr. Knopf have a point that because of political structures, ideology, philosophy, or historical traditions, the English-speaking world, excluding Canada--namely Australia, England, and the United States--has a different perspective on copyright that doesn't favour copying levies? Is that an important point he raises?

    For instance, where do you see the rest of Europe that is going to ratify, versus the point of view of perhaps the U.K. and Australia? It would be really interesting to hear your views.

    Mr. Claude Brunet: Indeed, for decades in copyright circles there has been quite an interest in trying to compare what is known as copyright systems to droit d'auteur systems. Curiously, interestingly--and in fact it's one of our rich contributions, I think, as Canadians--the Canadian Copyright Act has both. It's the Copyright Act--the right to copy, which is a right given exclusively to authors--and in French it is le droit d'auteur, the rights of authors. There is a philosophy behind both systems, and Canada has managed, over the last 60 or 70 years, to keep both harmoniously within the same act.

    A case in point and an illustration of this is that some years back you had in the Federal Court of Appeal three francophone justices saying that originality in copyright meant the contribution of the mind of the author. They were coming from le droit d'auteur.

    Soon afterwards, three anglophone justices of the same court, the Federal Court of Appeal, said no, in Anglo-Canadian law, the concept of originality is merely that you have not copied from somebody else and you have invested some effort in your production. It's known as the “sweat of the brow” theory. The Supreme Court of Canada came in before Christmas, in the CCH decision, and said actually, it's a mixture of both. It is skill and judgment, partly effort, partly intellectual exercise. That's what originality is in Canadian copyright.

    I welcome this, personally. I think this is Canada's contribution to the world, to be an example of where the copyright system and the droit d'auteur system come face to face and produce something that is neat.

    Mr. Lincoln, all of this long introduction is to say, I think, that that's the way the universe is unfolding, and I think that within the European Community this is ultimately where everybody is going. I think the United States of America, since they joined the Berne Convention in 1986, are moving slowly away from a pure copyright system, and although they will never move to a full droit d'auteur system, they are moving in the direction of a droit d'auteur system.

    A very clear example of that is the term of copyright in the United States, which used to be based on the copy. You registered your copyright and you had copyright protection for 28 years from the registration of the copy. This is a pure copyright system. Now in the United States the term of copyright is 70 years from the death of the author--the droit d'auteur. That's where the world is going, I think.

Á  (1150)  

    The Chair: Mr. Harvard, you had a quick question.

    Hon. John Harvard: I do have a question, but I want to start off with what I think is an analogy. I'm drawing upon what Mr. Lincoln raised.

    I appreciate your answer to Mr. Lincoln, Mr. Brunet, but I would offer this as an analogy. What we have here, instead of English language countries versus some kind of other language country, I think is the corporate view versus the individual. We have found it down on the farm. For 30 years we've had something called supply management, and really what it is, is this. Through the actions of government and through legislation, the individual farmer has been able to find some collective strength to control his price and to control his supply. What is the corporate view? “How dare you! You can't do that. I'm supposed to be there to divide and conquer for my own benefit.”

    It's the same thing with the Canadian Wheat Board. We've had it for over 50 years. Again, it was through legislation, empowering the individual producer to control his own destiny. And what do the corporate people say? “How dare you! I'm supposed to control your destiny, not you.” It's the same thing, I would suggest, with creators versus the corporate people. “How dare you, through the empowerment of legislation, protect yourself and exact a small price for your work!” That's the analogy, and if you can find a question, answer it.

    The Chair: Perhaps while everybody is pondering that question, Mr. Harvard, if the committee will allow me, I have a couple of questions. I must tell you that it's quite difficult to sit here as the chair and not ask a number of questions.

    But let me start by perhaps asking Mr. Thompson and Madam Bouchard a question with respect to what you said, Mr. Knopf, which is that what is actually happening with these levies that have been raised is that they're going south. And perhaps I've misinterpreted, but they're just going to American companies--I would assume that's what you meant. Do you mean that companies such as Sony Canada, run by Denise Donlan, and BMG Canada, run by Lisa Zbitnew, who are both Canadians, who work on behalf of Canadian producers, are somehow not distributing moneys to Canadian creators?

    I'm wondering, Mr. Thompson, do you share this concern that Mr. Knopf has, that somehow the creators, the performers, and the artists in Canada are not getting the benefit of that?

    And I believe, Mr. Thompson, that you actually did say that the members of your association are beneficiaries of private copying under PRS. Was I wrong in understanding that?

    Mr. Ken Thompson: That's absolutely right. Those members, those performers--they're not corporations--receive money through the PRS and it stays in Canada. Our members, our 21,000 members, are Canadians. They're Canadian performers.

    We also have an understanding with the American Federation of Musicians in Canada for Canadian musicians who are performers who would benefit from the levy. The money stays here.

Á  (1155)  

[Translation]

    Ms. Lyette Bouchard: As I was saying earlier, the members of the Société de gestion collective des droits des producteurs de phonogrammes et de vidéogrammes du Québec, SOPROQ, are Quebec companies, and the rights remain essentially in Quebec. In rare cases, there are some elsewhere in Canada.

    The private copying levies that have been distributed to date go to these companies. Thus, they do not leave Canada. I agree fully with what you said earlier. In Canada, private copying levies are paid to multinationals. I can't speak for CRIA or AVLA, but I can speak for SOPROQ. It's clear that in SOPROQ's case, the money from these levies benefits Quebec makers of sound recordings.

[English]

    The Chair: Mr. Knopf, did I misunderstand you?

    Mr. Howard Knopf: It's possible, or perhaps I wasn't clear.

    Dr. Rushton's study, which I've given to the clerk--

    The Chair: Just for a point of clarification, we cannot distribute in this committee anything unless it is bilingual. That's just a rule of this committee.

    Mr. Howard Knopf: With respect, Madam Chairman, I think it's more important that the committee be informed than that everything be bilingual, if I can be bold, without sounding like Don Cherry. I don't believe I'm hearing from you that you won't look at an important study because it hasn't been translated into French. I haven't heard any of the members of the committee today, except one, who is speaking in French. I think it's important that it be read.

    A voice: You're treading on dangerous ground, Mr. Knopf.

    Mr. Howard Knopf: I realize that, but I think the facts are what are important, if I can be so bold.

    Hon. John Harvard: You'll find it easier to repeal the levies than to change the policy of the committee on bilingualism, I assure you.

    Mr. Howard Knopf: You may have to put me on a seven-second delay.

    Dr. Rushton's study, by looking very carefully at SOCAN figures when they were finally made available to him, looks at what's happening under the current system. If we have to double the levies because of the national treatment, all of the extra money will by definition leave the country because that's going to foreign performers and foreign record producers. Under the current system, less than half will remain in Canada. Whether or not any of it gets through to individual artists or creators remains to be seen. I've yet to hear of any who have actually received a cheque.

    I'd like to tie this in with a couple of questions asked earlier by Mr. Harvard and Mr. Lincoln about individual creators benefiting because I think it's related to this. There is something very good to be said about the European system and the droit d'auteur system in that the levies over there serve one very useful purpose, which is that they generate what's called a cultural fund. For example, in France, 25% of the levies that are collected come off the top, stay in the country, are paid to individual composers, needy older musicians, social welfare funds, things like that, and are not subject to the grasp of foreign multinational record companies. They are retained locally and are not subject to national treatment. The music industry in Canada and its American parents would never consider such a thing and don't even want to talk about it.

    By the way, I did misspeak. The woman who called it the Canadian Recording Industry of America was not a music industry person. I think she was a motion picture person. But they're friends.

    The Chair: I understand that you may not be aware of our policy. This committee educates itself in both official languages. So it's not that we will not see the document. We will see it in both official languages. We don't preclude ourselves from reading it because it's only in one language. We educate ourselves in both.

    I have one final question with regard to the free trade area of the Americas agreement. With my rather limited knowledge of trade law, it's my understanding that the Government of Canada has taken the position, under the former ministers of international trade, that until such time as we have negotiated an international instrument on cultural diversity, we will be taking full exemptions on cultural goods and services. That has been the position of the government since I came here in 1997 and since the 1990 report was released by the SAGIT. You brought up the FTAA and whether or not, as Mr. Harvard said, it's going to go forward and that we would somehow become involved in the dispute resolution system. As we negotiate treaties and we negotiate away protections, one of the things that Canada has done in many cases, even under NAFTA, is take reservations for a number of things. So is it not feasible, considering what the government's policy is, that this is a reservation that we could take at that time?

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    Mr. Howard Knopf: I believe it was the late Prime Minister Trudeau who said that when a mouse is negotiating free trade with an elephant, the mouse has to be careful. I think it would be great if we could negotiate those kinds of exemptions and carve out reservations or whatever, but there have been any number of bilateral negotiations to date, including with Australia, where the countries have simply caved in to American pressure. Australia and Singapore, which are not insignificant economies--they're very powerful economies and very sophisticated countries--have knuckled under to American pressure in bilateral agreements that look a lot like the FTAA is going to look like.

    Of course, we don't know whether or not we're going to be bound by the FTAA. We can't see in the future. But there's a very realistic possibility that we will. This is a one-way street. Rights given are never taken away. They will never be taken away. In fact, if they are taken away, even under current law we may be subject to investor-state challenges under NAFTA. So taking away a right because all of a sudden here comes the FTAA may result in an investor-state challenge under NAFTA, which could be launched by private sector interests and not by the American government. If we tried to pull away the private copying regime down the line because here comes the FTAA, an American record company might be able to bring a challenge under NAFTA, and that could cost us big time. We've lost very badly on investor-state challenges thus far on the environment and whatever.

    The Chair: That's not absolutely correct. I'm not going to debate what happened there; however, the fact is that exemptions, carve-outs, and reservations do exist.

    Thank you very much.

    I'd like to thank all of the witnesses for coming before us. Thank you for participating in this very vigorous debate and thank you for giving us your recommendations.

    The meeting is adjourned.