Amend C-11 so communication royalties do not apply to online sales: Shaw

OTTAWA—The parliamentary committee studying copyright reform Bill C-11 should amend the legislation's proposed “making available right” to stop the collection of additional royalty fees on music and movie files sold online, Shaw Communications Inc. said at a committee meeting Monday. Shaw said the C-11 legislative committee should amend the bill so that the communication right applies to online broadcasting activities but not the online sale of files like music or movies. “Shaw proposes a straightforward amendment that would simply distinguish the sale of goods online, which would be treated as reproductions just as they are in the offline market, from internet broadcasting, which would be treated as communications to the public just as other forms of broadcasting,” Shaw wrote in a brief submitted to the committee Monday. The issue is now being considered at the Supreme Court of Canada, which held a hearing in December to look at whether copyright collective the Society of Composers, Authors and Music Publishers of Canada (SOCAN) can collect communication rights tariffs from online music distributors such as iTunes. The communication right, as currently applied to services like iTunes due to Copyright Board and Federal Court decisions, is a separate and additional royalty to the reproduction tariff paid to copyright collectives CMRRA/SODRAC. Bill C-11, the Tory government's omnibus copyright reform bill, proposes a “making available right” for the distribution of works online, which would effectively legislate a communication right, which is under discussion at the Supreme Court. The new making available right is in line with Canada's intent to implement two Internet treaties of the World Intellectual Property Organization (WIPO). Shaw said in a brief to the committee Monday that Canada can decide how it wants to implement the new right. “It is left up to the legislature of each WIPO member state to determine whether making available should be covered by a new right or an existing right,” Shaw wrote. Jean Brazeau, senior-vice president of regulatory affairs at Shaw told the committee Monday that, as drafted, the bill's making available right “could treat every transmission over the Internet as if it was a broadcast to the public.” He added: “This means that if someone buys a copy of a song from a service like iTunes, that transaction will be treated the same as if that song was played on the radio. We think that it is far more appropriate to treat an online sale of a song or movie or game the same as if that song, movie or game was purchased in a store.” Online music distributors in Canada collectively pay $5.4 million in royalties to clear reproduction rights under the act, according to an estimate by The Wire Report. A digital “communication right” recognized under the Copyright Act would be worth about $2.1 million in annual additional royalty payments from Canadian music download retailers, according to the estimate. Shaw wrote in a brief to the committee Monday that Bill C-11's approach would involve tariff rulings from the Copyright Board and “is completely at odds with the Government's stated policy objective of establishing a framework that would allow markets to develop and operate based on free negotiations.” SOCAN says the communication right, as applied to Internet transmissions, is an important revenue source for Canadian musicians and rights holders. The group has argued in court that Parliament created the communication right in section 3(1) of the Copyright Act to deal with advances in technology and the transmission of works on telecom networks. Shaw also told the committee Monday that it should clarify the bill's notice-and-notice provision on liability for Internet service providers (ISPs). Under the bill's proposed notice-and-notice regime, rights holders contact an ISP when they see allegedly infringing material on its network. The ISP then notifies the relevant customer about the complaint and informs them that the rights holder may pursue legal action. Shaw told the committee in its brief that ISPs will need “time to design and implement the automated notice processing systems that will be required in order to comply with the requirements of the Bill.” Shaw wrote: “Large ISPs receive hundreds of thousand of copyright notices each year. In order to forward these notices to subscribers in a timely fashion, ISPs will be forced to acquire sophisticated technological solutions capable of automatically identifying the relevant subscriber and forwarding the notice to that subscriber.” Shaw said large ISPs have been voluntarily running notice-and-notice regimes for years but small ISPs, particularly those serving rural communities, have not, and will not implement the regime until the bill becomes law. The government should enact regulations to implement the notice-and-notice system no later than a year after the bill comes into force to give the Industry Department time to consult and develop regulations to implement the regime. Shaw said those regulations should not come into force until six months after they are passed. “This should give ISPs sufficient time to develop and implement the automated systems they require,” the company said in its brief to the committee. Shaw said the bill proposes a measure to fine ISPs $5,000 to $10,000 if they do not comply with their obligations under the notice-and-notice regime, and that these penalties “do not distinguish between an ISP that simply refuses to comply with the notice requirements and an ISP that has taken every reasonable measure to comply with the law but suffers a technical failure.” The company said the provision should provide the courts with more flexibility to assess appropriate penalties given the circumstances of each case. The committee has been meeting four days per week in a rush to finish with the bill and send it back to the House by the end of the month. NDP MP and C-11 committee chair Glenn Thibeault said Tuesday be believes the committee's last witnesses will be heard on Wednesday due to scheduling problems. The committee will then move into clause-by-clause stage to consider amendments. "With the technical recommendations that are coming from the industry and from both members of all the committees , we are going to have our work cut out for us,” Thibeault told The Wire Report. news@thewirereport.ca

Amend C-11 so communication royalties do not apply to online sales: Shaw

Broadcast | March 6, 2012

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