Understanding Bill C-32

Copyright Modernization Act – Fair

Dealing and Related New Exceptions

November 17, 2010

barry b. sookman
bsookman@mccarthy.ca
416-601-7949

317
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Overview of Presentation
• Sections of Bill C-32 that will be covered:
• New fair dealing exceptions (s.29)
• New private use exceptions (s.29.21-29.24)
• User generated content exception
• Format shifting exception
• Time shifting exception
• Back-up exceptions
• New exceptions to foster “innovation” (30.61-63)
• Computer program interoperability
• Encryption research
• Computer and network security assessment
• Temporary reproductions for technological processes (30.71)

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

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

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

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

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New exceptions for individuals (s.29.21-24)

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

29.21(1) It is not an infringement of
copyright for an individual to use an
existing work or other subject-matter or
copy of one, which has been published or
otherwise made available to the public, in
the creation of a new work or other
subject-matter in which copyright subsists
and for the individual — or, with the
individual’s authorization, a member of
their household — to use the new work or
other subject-matter or to authorize an
intermediary to disseminate it, if
(a) the use of, or the authorization to
disseminate, the new work or other
subject-matter is done solely for non-
commercial purposes;
(b) the source — and, if given in the source, the name of
the author, performer, maker or broadcaster — of the
existing work or other subject-matter or copy of it are
mentioned, if it is reasonable in the circumstances to do
so;
(c) the individual had reasonable grounds to believe that
the existing work or other subject-matter or copy of it, as
the case may be, was not infringing copyright; and
(d) the use of, or the authorization to disseminate, the
new work or other subject-matter does not have a
substantial adverse effect, financial or otherwise, on the
exploitation or potential exploitation of the existing work
or other subject-matter — or copy of it — or on an
existing or potential market for it, including that the new
work or other subject-matter is not a substitute for the
existing one.

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 User Generated Content (UGC)
• Does the exception violate the Berne Convention, TRIPs, the WCT and
WPPT?
• Is exception without international precedent?
• Does section permit very substantial copying a work?
• The only condition placed upon the individual is that these “existing
works” be used in the creation of a new work. Could a new work be a
“collective work” or “compilation” of works such as “the best” of a TV
series or artists’ works?
• Is there any requirement that the new work be transformative or that
the copying be limited in extent or be fair?
• Does the exception negate the exclusive right to make derivative works
or undermine moral rights in a work?

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

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User-Generated Content Exception

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

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

SEINFELD
HARRY
POTTER
ALTERNATE
UNOFFICIAL Book 8
Jurassic
Jurassic Park
Park ENDING (unauthorized
The
The Movie!!
Movie!! sequel)
(unauthorized
(unauthorized
non-
non-
commercial
commercial
movie)
movie)

User-Generated Content Exception

(s.29.21) conditions:
• Done for non-commercial purposes
• Source of work is mentioned
• Non-infringing source material
• Use of work does not have
substantial adverse effect on market
of source material (individually)
The (non-infringing) works
could then be legally hosted
and downloaded or streamed,
or shared over p2p networks .
Unauthorized audio-book
with commentary

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

Website user could copy entire contents of websites including html

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

User-Generated Content Exception

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

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 Could the UGC exception undermine software licensing
including open source licensing models?

Under UGC exception, software developers could make modification to open source
software and distribute these without respecting the licensing terms and without
infringing copyright. Copyleft open-source licenses often require modifications that are
published in executable format also publish the source code of the modification. The
UGC exception would allow publication and distribution of open source code without
adhering to open source licensing conditions thus undermining use of copyright to
protect open source licensing models. See, Jacobsen v. Katzer 535 F.3d 1373 (Fed.
Cir. 2008)
User-Generated Content Exception (s.29.21) conditions:
• Done for non-commercial purposes
• Source of work is mentioned
• Non-infringing source material
• Use of work does not have substantial adverse effect on
market of source material (source material is free)

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 Format Shifting (s.29.22)
Industry Canada FAQ: “The bill will allow "format shifting." Consumers will be able to copy legally
acquired music onto devices that they own, provided that it is for private, non-commercial purposes and
does not break a digital lock.

29.22 (1) It is not an infringement of copyright for an

individual to reproduce a work or other subject-matter or
any substantial part of a work or other subject-matter if
(a) the copy of the work or other subject-matter from
which the reproduction is made is not an infringing copy;
(b) the individual legally obtained the copy of the work or
other subject-matter from which the reproduction is made,
other than by borrowing it or renting it, and owns or is
authorized to use the medium or device on which it is
reproduced;
(c) the individual, in order to make the reproduction, did
not circumvent, as defined in section 41, a technological
protection measure, as defined in that section, or cause
one to be circumvented;
(d) the individual does not give the reproduction away;
and
(e) the reproduction is used only for private purposes.
(2) For the purposes of paragraph (1)(b), a
“medium or device” includes digital memory in
which a work or subject-matter may be stored for
the purpose of allowing the telecommunication of
the work or other subject-matter through the
Internet or other digital network.
(4) Subsection (1) does not apply if the individual
gives away, rents or sells the copy of the work or
other subject-matter from which the reproduction
is made without first destroying all reproductions
of that copy that the individual has made under
that subsection.

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• Does the new copy have to made for the individual’s own private purpose? Does
the condition that a person “not give the reproduction away” prevent electronically
making copies for someone else’s use?
• Reproductions can’t be made by borrowing or renting copies from someone else,
but can a person give someone electronic access to his/her content e.g., their
iPod, or computer to make copies?
• Why are secondary dealings with the format shifted work not expressly prohibited
as they are in ss. 80(1) and 80(2) of the private coping exception?
• Can copies be made where it would conflict with an online contract?
• Do people have to buy or license the source file used to make the copy?
• Because the source copy is merely a copy that a person has legally obtained,
does the format shifting exception also apply where a person is entitled to make
copies of content under other limited exceptions e.g., private copying exception,
backup copy exception, time shifting exception, UGC exception, PAM exception,
and where a person has an exception which permits circumvention for specific
purposes only?

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 Time shifting (s.29.23)

Industry Canada FAQ: “This bill will allow Canadians to "time shift," or record television, radio or
Internet broadcasts, provided that it is done for private, non-commercial purposes. This bill does not
restrict the types of devices and formats that can be used, making this exception technologically
neutral.”
29.23 (1) It is not an infringement of copyright for an (2) Subsection (1) does not apply if the individual
individual to fix a communication signal, to reproduce a receives the work, performer’s performance or
work or sound recording that is being broadcast or to fix sound recording under an on-demand service.
or reproduce a performer’s performance that is being (3) The following definitions apply in this section.
broadcast, in order to record a program for the purpose of
listening to or viewing it later, if “broadcast” means any transmission of a work or
other subject-matter by telecommunication for
(a) the individual receives the program legally; reception by the public, but does not include a
(b) the individual, in order to record the program, did not transmission that is made solely for performance
circumvent, as defined in section 41, a technological in public.
protection measure, as defined in that section, or cause “on-demand service” means a service that allows
one to be circumvented; a person to receive works, performer’s
(c) the individual makes no more than one recording of performances and sound recordings at times of
the program; their choosing.
(d) the individual keeps the recording no longer than is
reasonably necessary in order to listen to or view the
program at a more convenient time;
(e) the individual does not give the recording away; and
(f) the recording is used only for private purposes.

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 The individual can make only a single recording, but can the
individual make additional permanent copies?
 How long can the library be retained?
 Does the exception permit making copies of streams obtained
through a subscription service, even if the copying is done in
violation of an agreement or online license?
 Can the new copy be used for private purposes other than
those of the person making the copy?

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 Backup copy (s.29.24)
Industry Canada Fact
Sheet: “Backup
copying: Allows
consumers, businesses
and institutions to make
backup copies of legally
acquired content to
protect against damage
or loss.”
• Is there any restriction on the uses that can be made of the copy?
• The back-ups cannot be given away, but can they be lent or licensed to others for their
use?
29.24 (1) It is not an infringement of copyright in a work or other
subject-matter for a person who owns — or has a license to use — a
copy of the work or subject-matter (in this section referred to as the
“source copy”) to reproduce the source copy if
(a) the person does so solely for backup purposes in case the
source copy is lost, damaged or otherwise rendered unusable;
(b) the source copy is to make the reproduction, did not circumvent,
as defined in section 41, a technological protection measure, as
defined in that section, or cause one to be circumvented; and
(d) the person does not give any of the reproductions away.
(2) If the source copy is lost, damaged or otherwise rendered
unusable, one of the reproductions made under subsection (1)
becomes the source copy.
(3) The person shall immediately destroy all reproductions made
under subsection (1) after the person ceases to own, or to have a
licence to use, the source copy.
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Computer Programs

¬ Is there an overlap
with the UGC or
format shifting
exceptions?
¬ Why have two back-
up exceptions for
computer programs?

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

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

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Encryption research
s.30.62 It is not an
infringement of copyright
for a person to reproduce
a work or other subject-
matter for the purposes of
encryption research if
(a) it would not be
practical to carry out the
research without making
the copy;
(b) the person has lawfully
obtained the work or other
subject-matter; and
(c) the person has
informed the owner of the
copyright in the work or
other subject-matter.
Is the section needed for “fair” encryption research?
“Research” is broadly construed and includes commercial
research. CCH v. Law Society of Upper Canada, 2004 SCC 13 It
includes the action “of looking or searching, effort to find
something”. SOCAN v. Bell Canada, 2010 FCA 123
Could the exception be used to copy and reverse engineer
encryption programs used to protect IT systems and networks
and transmissions/communications made using the networks?
Could the exception diminish the tools a company could use to
pursue those who hack its encryption and weaken a company’s
ability to protect the privacy and security of IT systems, networks
and transmissions?
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Computer and Network Security Assessment
s.30.63 It is not an
infringement of copyright
for a person to reproduce a
work or other subject-
matter for the sole
purpose, with the consent
of the owner or
administrator of a
computer, computer
system or computer
network, of assessing the
vulnerability of the
computer, system or
network or of correcting
any security flaws.
Is the section needed for “fair” security assessments?
Is the section limited to “ethical hacking” or does it permit any
manner of “assessing the vulnerability” of devices or for
correcting any security flaws”.
Could the exception enable reverse engineering of encryption
systems for the purposes of hacking IT networks and
systems?
Who’s consent would be needed in order to carry out the
vulnerability assessment? Is this consistent with the intent of
the encryption research exception?
Does the section have the potential to be misused to enable
hackers to undermine security systems?
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Temporary Reproductions for Technological Processes

s.30.71 It is not an Article 5 of the EU Copyright Directive

infringement of
copyright to make a “Temporary acts of reproduction which are transient or
reproduction of a work incidental [and] an integral and essential part of a
or other subject-matter if technological process and whose sole purpose is to enable:
(a) the reproduction a) a transmission in a network between third parties by an
forms an essential part intermediary, or (b) a lawful use of a work or other subject-
of a technological matter to be made, and which have no independent
economic significance, shall be exempted from the
process;
reproduction right provided for in Article 2.” (emphasis
(b) the reproduction’s added)
only purpose is to
facilitate a use that is Would the section have unintended consequences?
not an infringement of
copyright; and
(c) the reproduction
exists only for the
duration of the
technological process.

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