As almost every business has invested in some form ofintellectual property, copyright law can have an impact onthe way most organizations do business. Your businessprobably has a logo and a website, and you may havecreated (or paid a professional designer to create) art workand graphic designs. You’ve probably also developedwritten content describing and promoting your business’products and services. You may have even produced somevideos showcasing your services or your retail ormanufacturing operations. All of this material is potentiallyprotected by copyright law.

In general terms, copyright law protects original written,artistic and musical works, photographs, movies, andcomputer programs as well as sound recordings andcommunication signals. In the digital era, it also covers thesongs on your iPod and the videos on YouTube. Copyrightlaw gives the owner of the work the right to copy ordistribute the work, broadcast it on TV or the Internet,licence it to somebody else for a fee or use it to make a newwork. If you or your employees created the work, copyrightlaw also supplies you, as the rights holder, with variouslegal means of preventing others from infringing on yourcopyright by using your work without authorization. If youpaid someone else to do the work for you, you may alsoown the copyright, depending on the terms of youragreement with the creator.

Copyright law works both ways, however. If your websiteuses images that you “found” on the internet, or you playbackground music in your restaurant without paying aroyalty, you may be infringing somebody else’s copyright.Copyright infringement by consumers is a major concernof many businesses that produce, broadcast or distributeelectronic media or computer software, as well asbusinesses that act as intermediaries between producersand consumers.

What’s New in Copyright Law?Canada’s Copyright Act was first enacted in 1921 and hasbeen revised many times since then. The latest round ofamendments are far-reaching and affect a variety ofstakeholders, including performers, authors, film studios,recording companies, Internet service providers (“ISPs”)and consumers as well as any business that relies on theInternet and digital content to operate. Changes, however,were long overdue as Canada’s copyright law had not beensubstantially updated since 1997. As a result, the federalcopyright regime was outdated and did not reflecttechnological innovations such as the use of the Internetand digital media.

After much debate and three failed attempts, Bill C-11, theCopyright Modernization Act (the “CMA”) received RoyalAssent last summer and was mostly proclaimed into forcein November 2012 (some provisions have been delayedpending ratification of international instruments and otherswill need a public consultation process before regulationscan be finalized).

The amended Copyright Act strives to balance severalcompeting policy considerations, such as increasinginnovation and competition, permitting users to deal fairlywith legitimately acquired copyright materials andpermitting content creators to protect their works fromunauthorized use. The amendments update the rights ofcopyright owners to better address the challenges andopportunities posed by the Internet and conform tointernational standards. Another goal is to clarify ISPliability for customer infringement and to expand theallowed uses of copyright material by libraries and schools.

Protecting Rights Management InformationThe Copyright Act now prohibits the removal of rightsmanagement information (“RMI”), an important concept in

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August 2013

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Canada’s Copyright Act underwent major revisions late last year but copyright law and policy remains acontinuing concern for media creators, broadcasters and rights owners as well as for service providers and digitalconsumers. This newsletter highlights some of the key changes.

The New Copyright Law and Your Business: Stay on Top of RecentChanges to Protect Your Rights

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licensing copyright materials and other intellectualproperty. RMI is basically information that identifiescontent which is protected by copyright, the identity of therights holder and the terms and conditions of use. Digitalwatermarks are a common example of RMI as they areused primarily as the rights holder’s “label” but can alsointeract with playback devices to provide informationabout the material. A musical recording, for example, maybe watermarked with RMI that includes the artist’s name,the track’s title and the scope of playback rights.

RMI allows users to verify the authenticity of purchasedworks while also allowing copyright owners to attach theirchosen terms and conditions for use. Removing electronicRMI is strictly prohibited in new section 41.22 of theCopyright Act. This section also permits rights holders toseek legal remedies such as injunctions, monetary damagesor delivery of property when RMI has been removed oraltered.

Technological Protection MeasuresThe amendments bring the Copyright Act closer to theinternational Copyright Treaty adopted by the members ofthe World Intellectual Property Organization (“WIPO”),which include Canada. The amended Act now protectstechnological protection measures (“TPMs”), commonlyreferred to as “digital locks.” A TPM is defined as anytechnology, device or component that controls access to awork or prevents certain uses of a work. Thesetechnologies, devices or components include encryptionsoftware (found on DVDs and some digital media, such ase-books and music), access codes and passwords.Basically, TPMs are placed on a device, file or disc to allowthe content creator to dictate how the content will be usedand to help prevent piracy.

New sections 41 to 41.22 of the Copyright Act implementthe provisions of the WIPO Copyright Treaty aimed atpreventing the circumvention of TPMs, except undercertain limited circumstances (some of which are listedbelow). Circumventing access control TPMs is nowprohibited, as is offering services to the public which areintended primarily for the purpose of circumventing TPMs.Manufacturing, importing or distributing devices ortechnologies designed to circumvent TPMs is alsoprohibited. It is worth noting, however, that no statutory

damages may be awarded if the copyright infringement wasfor an individual’s private purposes. Further, onlyinjunctions (and not monetary damages) are available if alibrary, archive, museum or educational institutioninadvertently contravenes these provisions.

Circumventing access control TPMs will not infringecopyright in certain legitimate “public interest”circumstances, which include:

• law enforcement and national security activities• encryption research• personal information protection • network security• access for persons with a perceptual disability• unlocking a wireless device

The provisions dealing with TPMs are likely the mostcontroversial amendments to the Copyright Act. On the onehand, Canadians now have the right to use and manipulatecopyrighted material for their own personal use by allowingfor time-shifting, format-shifting and back-up copying (alldiscussed in further detail below). On the other hand, theseprovisions effectively disallow activities that the CopyrightAct otherwise permits. As well, the listed circumstancesunder which breaking an access control TPM is permitteddo not include personal or educational use.

Prohibiting “Enablement” Section 27 of the Copyright Act has been amended toinclude a new form of secondary infringement called“enablement”. This section will provide copyright holderswith a cause of action they can use to sue those who providea service primarily for the purpose of enabling acts ofcopyright infringement. A peer-to-peer file sharing site, forexample, may be considered to enable users to infringecopyright in the shared works. This new section will makeit easier for copyright owners to stop copyrightinfringement by pursuing sites that facilitate file-sharing.

The government has stated that this new provision isintended to stop media piracy and help support thedevelopment of significant “legitimate” markets fordownloading and streaming media in Canada. The amendedCopyright Act also expressly excludes services that enableinfringement from provisions that protect ISPs and searchengines from liability for infringements by subscribers.

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Expanding the “Fair Dealing” ExceptionThe “fair dealing” exception in the Copyright Act providesa defence to a claim of infringement by allowing users to“deal” with copyright materials for certain specificpurposes provided the dealing is “fair”. The amendedCopyright Act adds the new categories of education, parodyand satire to the existing exemptions for research, privatestudy, criticism, review and news reporting.

Fair dealing is examined by the courts on a case-by-casebasis. The court will determine first if the use in questionfalls within one of the above categories and then assess thefairness of the use under the circumstances. In a leadingcase, CCH Canadian Ltd. v. Law Society of Upper Canada,the Supreme Court of Canada identified factors such as theamount of copyright material used, the purpose of the useand the available alternatives as relevant to determiningwhether a use is fair.

The amendments to the Copyright Act expand the first partof the test by including additional categories of allowableuse but do not change the requirement that the use be fairunder the circumstances. This means, for example, thatwhile instructors may now display or use copyrightmaterial for educational purposes, they cannot do sounfairly by, for example, making excessive copies.

“Mash-up” Exception Teachers and other users may also benefit from a newprovision of the Copyright Act dealing with non-commercial user-generated content that essentially allows auser to “remix” copyright works for non-commercialreasons, including educational purposes.

This uniquely Canadian exception has been dubbed the“YouTube” or “mash-up” exception because it allows usersto take copyright materials, such as music, to create newmaterials, such as personal videos, and share them withothers (e.g., using social media) without fear of infringingthe original artist’s copyright. In order for this exception toapply, the source of the original content must also bementioned (where reasonable) and the user must believe thatthe source material was non-infringing. As well, the mash-upcannot have a substantially adverse financial or other effecton the copyright holder’s ability to use its own material.

Expanding Rights for Private CopyingA new section of the Copyright Act (29.22) gives individualusers the right to reproduce copies of legally obtainedcopyrighted works, such as music from purchased CDs, forprivate purposes on a digital medium or device such as anMP3 player. This is often referred to as “format-shifting”.This right is subject to certain limitations, however. Thecopy used to make the reproduction must not be aninfringing copy; the copying must not involvecircumventing any TPMs; and the individual user must notgive the reproduction away. Essentially, this provisionlegitimizes the common practice of transferring CDs to aniPod. It does not, however, allow a user to copy music ontoan iPod if the music is from a borrowed CD.

Another new section (29.23) introduces a time-shiftingexception which makes it permissible to make a singlecopy of a broadcast program for later viewing. This isknown as “time-shifting”, but the exception is popularlyreferred to as the “TiVo exception”. As with the format-shifting exception, however, certain limitations apply.

In addition, new section 29.24 allows users to make a back-up copy of copyright material that has been legallyacquired for personal use if they have done so solely for thepurpose of protecting against damage or loss. Obviously,this exception does not apply if a TPM has beencircumvented in the process of making a back-up copy.

These changes are significant for members of the Canadianpublic as they represent an acknowledgement by legislatorsof the ways in which digital media is actually being used byconsumers, unlike the previous version of the CopyrightAct which prohibited these types of reproductions.

Capping Statutory DamagesThe amended Copyright Act now distinguishes betweeninfringement for commercial and non-commercialpurposes for purposes of a copyright owner’s ability toclaim damages for infringement. The CMA did notintroduce any changes to the statutory damages which maybe awarded for copyright infringements made forcommercial purposes.

The Copyright Act now provides that statutory damages fornon-commercial infringement will be capped at $5,000 andcourts are now permitted to award as little as $100 for a

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This article provides information of a general nature only and should not be relied upon as professional advice in any particular context.For more information about Business Law, contact a member of our Business Law Practice at 905.273.3300.

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single non-commercial infringement. Under the priorlegislation, copyright owners could sue for statutorydamages for copyright infringement of $500 to $20,000 foreach act of infringement, whether the infringement wascommercial or non-commercial, without having to provethat they suffered actual damage. The reduction is intendedto ensure that Canadians do not face disproportionatepenalties for minor infringements.

As a result of these changes, copyright holders will likelyfind in uneconomical to pursue court claims againstindividual consumers for infringements like illegallydownloading a single movie or music CD. Cases currentlybefore the courts, however, suggest that owners have notgiven up their fight against infringement. One strategybeing pursued in Canada (as well as in the US and the UK)is for rights holders to use third party “enforcement” firmsto identify the IP addresses of computers that havedownloaded copyright material and then seek court ordersto require the ISP to disclose the names and addresses ofthe customers associated with those IP addresses forpurposes of making a settlement demand. This practice of“speculative invoicing” has been highly controversial inother jurisdictions but it remains to be seen how the Federal

Court of Canada will respond to these types of ISPdisclosure requests.

Putting the “Notice-and-Notice” Regime onHoldThe so-called “notice-and-notice” regime is a significantfeature of the CMA which remains outstanding as of thedate of publication of this Newsletter. New sections 41.25and 41.26 of the Copyright Act will allow a copyrightowner to send a notice of alleged infringement, in aprescribed form, to an ISP or search tool provider. Theregime then requires the recipient to forward these notices“as soon as feasible” to the individual subscriber or userwho is allegedly infringing the copyright and to keeprecords allowing those individuals to be identified.

These are just some of the changes to copyright lawaccomplished by the CMA. Rights holders and creators,broadcasters, Internet intermediaries and media consumerswill require a more detailed analysis of how Canada’s newcopyright regime will affect them and the way they dobusiness. If you need help understanding these changes orapplying copyright law to your business, please contact amember of our Business Law group.