Thank you to the committee for the opportunity to participate in this study today.
Again, as stated, my name is Jayson Hilchie, and I'm the president and CEO of the Entertainment Software Association of Canada. The ESAC represents a number of leading video game companies with operations in this country, from multinational publishers and console makers, to local distributors and Canadian-owned independent studios.
Canada's video game industry is one of the most dynamic and prolific in the world. We employ close to 22,000 full-time direct employees, while supporting another 19,000 indirect jobs. Our industry's contribution to Canadian GDP is close to $4 billion, and this is not revenue. These are salaries of our employees, those who our industry supports, along with their collective economic impact, and our impact is considerable. With only 10% of the U.S. population, Canada's video game development industry is roughly half the size of the U.S. industry, which is the world's largest, so I cannot stress enough how important Canada is within a global context with respect to the production and the creation of video games.
Many of the most successful games globally are created right here in Canada. Like many other IP-based industries, piracy is still an issue for us and we have to innovate constantly to battle it. One of the ways we have combatted piracy is to move to a model where most of the games we produce have some sort of online component. This involves creating an account that enables content to be downloaded from a central server or, more commonly, including a multi-player mode within the game. This is very effective in limiting the ability of counterfeiters to flourish as pirated games will not be able to access the online functions that are offered. The only content the player accessing the pirated game will be able to use, in most cases, will be the single-player mode, which within our industry is becoming less and less common.
In addition to making games that have this online functionality I just spoke about, our industry uses technological protection measures to combat piracy, both in the form of software encryption technologies and physical hardware found in video game consoles. These technological protection measures essentially do two things: They work to encrypt the data on a game which thwarts copying it, and they make copied games unreadable on the hardware console. While in many cases these measures do eventually fall victim to committed pirates who work to crack the game, they provide a window for the company to sell legitimate copies during the period of most demand, which is often the first 90 days.
As encryption technology improves, it's taking longer and longer for the pirates to crack the game, which improves and lengthens the window a company has to recoup their investment in their product. In some cases, those who sell what we refer to as “modchips” offer their services online with the promise to allow your console to circumvent the protections found within it and play copied games. These circumvention devices were made illegal in Canada in 2012 as part of Canada's Copyright Modernization Act.
In fact, just last year, Nintendo used Canada's copyright law to successfully sue a Waterloo, Ontario, company that was selling circumvention devices online. After a lengthy process, Nintendo was awarded over $12 million in damages, and multiple media outlets reported the ruling in Federal Court affirmed Canada's copyright law as one of the strongest in the world.
The Copyright Modernization Act has proven effective by providing protections to content creators in the games industry. As our economy moves increasingly to one that involves digital goods and services, it's critical that these protections remain in place. However, we can also do more to ensure that consumers understand the impacts of piracy.
The notice and notice regime in its purest form has intentions to do this, but notices are not consistently forwarded from ISPs as is required, and consumers who receive those notices often do not understand them or ignore them. We believe there's an opportunity for the Government of Canada to work with ISPs to ensure that the notice and notice regime is properly enforced and utilized. Ensuring that these notices of infringement are regularly and consistently forwarded by ISPs is the most effective way to increase accountability and promote awareness and education opportunities for those who are infringing content, intentionally or otherwise. By better educating people about the harms of piracy, we can work to improve conditions for creators of all types.
Thank you very much.
I have up to seven minutes.
Thank you, Mr. Chair.
My thanks to all the members of the committee.
My name is Paul Gagnon. I am a legal advisor with Element AI. I deal with matters of intellectual property and data.
I'll give the testimony on behalf of Element AI in English, although I welcome questions in French in the later stages of today's hearing.
Thank you for giving us the opportunity to speak today. Element AI is a Montreal- and Toronto-based artificial intelligence product company. We're celebrating two years of activity shortly and making headlines all across the world with offices in London, Singapore and Seoul.
It's a great privilege to come before you today, especially as an IP geek. It's a great occasion to come in and comment on copyright reform.
Element AI is bringing fundamental research as quickly as possible into actionable products and solutions for companies. Our momentum is favourable. We're quite proud of our achievements, but the best is yet to come, which is why we're here. We want to discuss how Canada's place as a world leader in AI is not guaranteed. We'd like to invite limited and targeted reform within the Copyright Act, in order to clarify a specific use case around informational analysis, also known as text and data mining.
This lack of certainty around the act impacts a very important activity for the development of artificial intelligence. This informational analysis, within the context of fair dealing, would be beneficial for all Canadians and more specifically as well, those who are active in the sector of AI.
This targeted exemption would help us secure a predictable environment for AI, in order for it to maintain its unprecedented growth. Competition in AI is global. Other countries are actively building policy tools to draw in investment and talent. We urge Canada to do the same.
When we speak to informational analysis, what are we referring to? We're talking about analysis that can be made of data and copyrighted works, in order to draw inferences, patterns and insights. This is informational analysis, not the use of the works themselves, to draw from them and use and extract information from these works. It's distinct from using the works themselves. It's about abstraction. It's not about commercializing the works themselves and undercutting Canadian rights holders.
As a quick example, if we were to look at the paintings in this building when we walked in, it's not about taking pictures of these paintings and making T-shirts. It's about looking at the paintings themselves and drawing patterns, measuring distances and measuring the colours and tones that are used by artists.
To use another example which is more relevant to your day-to-day work in Parliament, if you were to look at the Hansard debates and use them for informational analysis, we wouldn't be binding books and selling the debates. Perhaps we'd be using translated words to build more functional algorithms to translate works. We see that here there's an abstraction. It's not the work itself; it's the information that we can derive that's used.
Data is truly the fuel that powers the engine of AI. Algorithms in AI-based products need diverse, representative and quality data. That is the supply chain around AI to provide actionable insights and data, in order to provide better products and services.
A good old expression in computer science is garbage in, garbage out. This truly applies to artificial intelligence and informational analysis. Our AI will only be as good as the data we provide to it. Therefore, the targeted exemption we want to speak about today aims to broaden this scope, in order for our AI to be quality, representative and in turn, made accessible for Canadians everywhere.
We think that with a clearer right and resolving the legal uncertainty around informational analysis, we can drive fairness, accessibility and inclusion of AI-based solutions. Really, better data means better AI.
Under the current Copyright Act, how is informational analysis understood? How is it apprehended? The Copyright Act protects copyrighted works, but it also protects compilations of copyrighted works and also compilations of data. There are three fronts that are protected.
As you've seen in the works of the standing committee, the Copyright Act is about balancing different interests, users' rights and access, but also rights holders, which is why we suggest that informational analysis be made part of the fair dealing exemptions.
Fair dealing exemptions are limited in purpose. The act clearly states the purposes around what kind of intention we can bring to analysis we can draw, for example, research use, private study or news reporting. Where there's an overarching public interest, the act has clarified that there's a clear purpose that's permitted within fair dealing.
Informational analysis, as we've explained it, how is it apprehended as the act exists today? It's not clearly addressed, and so there's legal uncertainty around this. We could look perhaps to the temporary reproduction exemption, but that doesn't quite fit. If you turn to specific fair dealing exemptions, research, private use, this isn't clear. We think it's within reach of Parliament to clarify this, and in turn help drive investment and certainty for Canada's AI sector.
If we look at research purposes more specifically, the uncertainty here is quite impactful. Indeed, it could permit the informational analysis itself under research, but there's clear uncertainty as to whether we can leverage this research into products and solutions. Relying on solely the research exemption might not be enough.
We suggest this exemption not be limited to the identity of the specific entities conducting this informational analysis. Truly, if you look at research around AI, the public sector is quite active, as is the private sector. At Element AI, we collaborate every day with researchers at universities across Canada. If we were to clearly exclude commercial entities such as ours to perform this research, it would fundamentally misapprehend the nature of research in Canada.
What's the impact of this uncertainty? In time, if we do not bring this additional added clarity to informational analysis, it can have real and practical impacts on Canada's competitiveness in the AI sector. It can deter R and D investments, and create risks for businesses. Not having legal clarity around informational analysis disproportionately impacts startups and SMEs. Why? As we all know, certainty and predictability are the currency for our entrepreneurs. On the other hand, big players have deep pockets to litigate and fight through this uncertainty. We might not have this luck for our startups and SMEs.
Should we wait for this to be litigated in court and clarified downstream two or three years on? We don't think so. There's a great opportunity to clarify this now.
We often hear that we live in the age of big data, which is true. In terms of volume, there are massive amounts of data generated every day, but there's a huge data gap. Because we generate that data, it doesn't make it accessible to smaller players. Indeed, there's a huge gap between who controls and has access to this data. To ensure the competitiveness of our SMEs, our startups and our more established companies, it's essential to make sure there can be clearer access to this data in order to bridge this data gap in order for this chasm between Internet giants not to be broader.
Why informational analysis fits well under the fair dealing exemption is it benefits from past interpretation of the courts. It's a clear framework, and it's one that aims for fairness. Through case law, it has established clear criteria we can rely upon. Those criteria are flexible and adaptable to different use cases.
Fundamentally, copyright protects the expression of ideas and information, not information and ideas as such. It's a fundamental principle of copyright law. Fair dealing, in this context, especially for informational analysis, brings a clear fence that is quite reasonable, and clearly brings more certainty to our private sector.
The key point here is that an exemption for informational analysis can help democratize access to data and create certainty for the emerging AI industry. In turn, this will help maintain Canada's leadership role as a global hub for AI.
Good afternoon, Mr. Chair, vice-chairs and distinguished members of the committee.
My name is Christian Troncoso and I'm the director of policy for BSA The Software Alliance.
BSA is the leading advocate for the global software industry before governments and policy-makers around the world. Our members are at the forefront of software-enabled innovation that powers the global economy and helps businesses in every industry compete more effectively.
Because copyright policy is a critical driver of software innovation, we're deeply appreciative for this opportunity to appear before the committee today.
This committee's review of the Copyright Act comes at a very timely moment.
With the recent announcement of the pan-Canadian artificial intelligence strategy, Canada has staked out an ambitious goal of becoming a global leader in the development of AI. This committee has a critical role to play in helping realize that vision.
To become a global leader in AI, Canada will need to set in place a policy environment that will enable its R and D investments to flourish. One critical competitive factor will be access to data. AI research often requires access to large volumes of data so that software can be trained to recognize objects, interpret texts, listen and respond to the spoken word, and make predictions. Ensuring that Canadian researchers can compete with their counterparts in other AI leading nations will therefore require careful examination of government policies that affect their ability to access data. Copyright is one such policy.
As currently enacted, the Copyright Act may place Canadian researchers at a disadvantage relative to their international competitors. For instance, unlike the U.S. and Japan, the Canadian copyright system creates uncertainty about the legal implications of key analytical techniques that are foundational to the development of AI. This committee can shore up the legal foundations for Canada's investments in AI by recommending the adoption of an express exception to copyright for information analysis.
Many of the most exciting developments in AI are attributable to a technique called machine learning. Machine learning is a form of information analysis that allows researchers to train AI systems by feeding them large quantities of data. This so-called training data is analyzed for the purposes of identifying underlying patterns, relationships and trends that can then be used to make predictions about future data inputs.
For instance, developers have created an app called Seeing AI that can help people who are blind or visually impaired navigate the world by providing audio descriptions of objects appearing in photographs. Users of the app can take pictures with their smart phones and the Seeing AI app is able to translate for them, through an audio description, what is occurring in front of them. To develop the computer vision model capable of identifying those objects, the system was trained using data from millions of photographs, depicting thousands of the most common objects we encounter on a daily basis, such as automobiles, street crossings, landscapes and animals.
It would be understandable if you were wondering right now what any of this has to do with copyright. The uncertainty arises because the machine learning process may involve the creation of machine readable reproductions of the training data. In some instances, the training data may include works that are protected by copyright. In the case of Seeing AI, that would be the millions of photographs that were used to train the computer vision model to identify common objects.
To be clear, the reproductions that are necessary for machine learning are used only for the purposes of identifying non-copyrightable information from lawfully accessed works. However, the Copyright Act currently lacks an express exception to enable that type of informational analysis. Therefore, there is considerable uncertainty about the scope of activity that is permitted under current law. This uncertainty poses a risk to Canada's AI investment, and provides a competitive advantage to those countries that provide firmer legal grounding for AI development.
Japan is one such example. In 2009, Japan passed a first of its kind exception for reproductions that are created as part of an “information analysis” process. Earlier this year, the Japanese diet amended the exception to make it more broadly applicable for AI research. Analysts now credit these legal reforms for transforming Japan into what they call a machine learning paradise.
In the U.S., courts have also confirmed that under the fair use doctrine, incidental copying to facilitate informational analysis is non-infringing. In September, the European Parliament voted in favour of a new copyright provision that would provide member states with the flexibility necessary to create broad exceptions for information analysis. Singapore and Australia are currently considering the adoption of similar exceptions.
These developments reflect an emerging consensus that the creation of machine readable copies for purposes of information analysis should not be considered copyright relevant acts. Copyright protection was never intended to prevent users from analyzing a work to derive factual, non-copyrightable information, so it makes little sense for copyright law to prevent such an analysis merely because it's being performed by a computer.
To ensure that Canada's significant investments in AI will pay dividends long into the future, the Copyright Act should be modernized to provide legal certainty for this common sense proposition.
The reproductions that are made in the course of training AI systems are unrelated to the creative expression that copyright is intended to protect, are not made visible to humans, and do not compete with or substitute for any of the underlying works. In other words, exception for information analysis poses no risks to the legitimate interests that copyright is intended to protect.
Copyright is ultimately intended to provide incentives for the creation of new works. An exception for information analysis advances this objective by stimulating the creation of new research and enabling the discovery of new forms of knowledge. By recommending the adoption of this exception, this committee will ensure that the Copyright Act remains fit for purpose in an age of digital intelligence.
Thanks, and I look forward to the questions.
Chair and honourable members of the committee, it's a privilege to be here today on behalf of the Information Technology Association of Canada, also known as ITAC, to discuss the review of the Copyright Act.
ITAC is the national voice of Canada's ICT industry, an industry that includes over 37,000 companies, generates over 1.5 million jobs and contributes more than $76 billion to the economy.
In today's world, technology can and is outpacing our laws and regulations, and it's crucial that Canada as a global leader does not fall behind.
Today, I'd like to address how the copyright review will fit into the bigger picture of the digital economy in Canada. I'll focus on machine learning and artificial intelligence, and the ways in which copyright rules and regulations will be impacted.
Copyright plays a crucial role in protecting owners while promoting creativity and innovation, which is vitally important when it comes to the tech sector. The key is finding the balance between protecting the rights of the creator with the ability of users to access and benefit from their creation. The difficulty is maintaining the balance between both ends of the spectrum. Otherwise, the entire balance of the digital economy will suffer. In short, we need to get this policy right.
Let's take a quick look at Canada's technology landscape. This has been an exceptional year of investments in Canadian technology, with unprecedented job growth, sizable FDI and several Canadian tech firms going global.
In today's economy, a tech job could be in almost any sector. Many tech-related jobs are no longer just about computer science or programming. It's now about combining anything you're passionate about with technology. This includes health care, the environment, energy, mining, agriculture, the creative arts, as well as core tech jobs like cybersecurity, networking and data analysis.
This is why ITAC has worked with post-secondary institutions to create business technology management programs that blend training in business and tech. This is important because the battle for tech talent is now fought on a global scale, and Canada is in a unique position and is viewed as a leader. That's one of the reasons so many big-name tech investments are taking place across the country. Technology and its application in cutting-edge fields is no longer a domestic feel-good story, and Canada is a serious player in the digital world economy, a destination for investment and a world leader in artificial intelligence.
Over the past year, global talent has been strongly flowing into Canada, including from the U.S. That is something unforeseen not too long ago. Almost every city in Canada has tech incubators, and there are many examples of massive global tech firms investing significantly in tech jobs. Equally important, there is domestic technology growth going on here as well, owing to increased access to talent and venture capital, and public support for small business. This adds to a combination of competitive tax rates, business costs, and a strong economy, which form an environment that is ready for success.
A key reason for this success is that we have the right approach to copyright, a very balanced approach, and this should continue. The act is working. We need to be careful about recommending sizeable changes that may have unintended consequences to other industries. The tech industry believes that the 2012 review was a successful and important factor in the growth of the Canadian tech sector.
There's no escaping the reality that technology has changed our world forever, and the sheer amount of data that exists, and will grow, will require the use of machines to be able to sort that data. Computers far surpass humans' ability to quickly download and process data, but when they are used in conjunction with human thought and intuition, the way we work, learn, and grow, and the ways we navigate the world around us can be done so much more efficiently.
As I said at the outset, our role as a national industry association is to work closely with our members, so we reached out to them to ask about copyright concerns, and they all named artificial intelligence, or AI, and machine learning.
Canada needs to match its vision of being a leader in AI with a policy framework that supports AI development and commercialization. This requires policies that promote access to data, and broad access to data is fundamental to AI. AI research and products need large quantities of data so that software can be trained to interpret text, recognize patterns and make predictions. Broad access to data is also needed to mitigate the risk of bias in AI solutions.
The importance of access to data has been recognized in other countries, including the U.S. and Japan, where copyright laws explicitly allow for the reproduction of copyright-protected works to facilitate information analysis by computers.
If Canada does not amend the Copyright Act to provide a similar exemption to infringement, it's reasonable to predict that we'll fall behind these other countries with AI talent and investment capital migrating to more favourable jurisdictions. We need to be clear: Adding an exemption for information analysis does not undermine the interests of content owners. The right to read, understand and analyze information data has never been subject to control under copyright laws. Using a computer to learn more efficiently, when compared to manual reading, viewing or observing works, does not implicate the rights of owners. Owners will continue to control access to their works.
Today there's a global AI race as other countries are trying to catch up and surpass Canada in this industry. Just because Canada is seen as a global leader, we cannot rest on our laurels. For years we've said, “If only we can convert our reputation from being pure researchers into developing business.” Well, AI is one of these opportunities. We do not want a chilling effect on the growth of AI in Canada, especially right now, and poor policy choices will especially impact and harm small firms, which are the backbone of our economy. If we do not enable broad access to data, SMEs and start-up firms will be impacted the most. These enterprises and firms will have little or no data on their own, making access to published works and data critical to their research and commercialization efforts.
Broadly, this is what we propose: that the committee acknowledge that the Copyright Act does not implicate the copying of lawfully accessed works for AI purposes and the committee recommend that a new exception be added to the Copyright Act to clarify that copying, analyzing and using lawfully acquired works and data to develop new knowledge does not require authorization of the copyright owner. If we want Canada to maintain an industry leadership position in AI, we need to get this policy right.
ITAC has traditionally called on government to better engage the tech community in the development of policies and, frankly, we're pleased to say that government, including this committee, is doing more and more of this. Industry can provide insight and share knowledge and expertise, which is especially important with new technologies.
How can government support the growth of the technology industry? It does not need to be direct funding, although that can help. It can also be setting the policy framework that strikes the right balance. As Canada continues to grow the tech sector, access to data is one variable, along with financial capital, talent and commercial opportunities, that can help ensure that investments continue.
We believe that the global best practice can be applied to the copyright review. The act has a mandatory review every five years; however, technology will continue to outpace the speed of legislation. Thus, we're looking for changes to copyright, but we're looking for a surgical approach. The committee has been assigned a very tough job, and it will be very hard to try to please everyone. However, our overarching message is that the act needs a surgical update and, frankly, will need a scalpel going forward, not a hammer, given the rate of change.
In closing, I'd like to thank the committee for the extensive consultations they've done thus far.
Thank you for the opportunity to present our industry's perspective.