International Confederation of Authors and Composers (CISAC)

COU21-0479

The Honourable Steven Guilbeault
Minister of Canadian Heritage
House of Commons
Ottawa, Ontario K1A 0A6
Canada

The Honourable François-Philippe Champagne
Minister of Innovation, Science and Industry
House of Commons
Ottawa, Ontario K1A0A6
Canada

Neuilly sur Seine, May 31, 2021

Dear Mr. Guilbeault and Mr. Champagne,

Public consultation on online platforms liabilities

We hereby respectfully write to you on behalf of the International Confederation of Authors and Composers (CISAC). CISAC is a non-profit, non-governmental organisation with 231 member organisations in 121 countries and is the leading network of authors’ organisations in the world. Through its members, CISAC represents more than 4 million authors from all over the world including all artistic repertoires: music, audiovisual arts, dramatic arts, literature, and visual arts. In Canada, we are supporting the activities of SOCAN (Musical, Visual Arts), CARCC (Visual Arts), CSCS (Audiovisual), DRCC (Audiovisual) and SARTEC (Audiovisual).

We have learned that the Canadian Government has recently launched a Consultation on Modern Copyright Framework for Online Intermediaries and thus, joined the global movement of reconsidering and updating the safe harbours regime. CISAC supports any initiative aiming at implementing a more effective, efficient and adaptable copyright system reflecting the evolving digital world. Therefore, CISAC welcomes this public consultation as it is a first step towards addressing the failings in the online market (referred to as “transfer of value” or “value gap”), which acts against the best interests of creators and the economy as a whole.

In order to help the Canadian Government achieve its policy objectives, CISAC would like to take this opportunity to highlight certain key improvements to the current safe harbour regime which will help secure a better future for creators while creating a modern and balanced legal framework for all stakeholders. Also, CISAC would like to take the advantage of the review of the Canadian Copyright Act to encourage the Government to promote a technologically-neutral private copying regime.

1/ Clarifying Intermediaries’ Safe Harbour protection against liability for copyright infringement

As rightly pointed out in the Consultation paper, the way creative works are accessed by users has seen a huge transformation in the last ten years. Unlike in the past, creative content is no longer exclusively available from digital service providers that obtain a licence and pay for the content they provide (e.g., Spotify, Deezer, etc.). Such content is now widely available and shared through platform-based services (such as You tube, Soundcloud, Tik Tok, etc.) which are competing with authorized digital service providers. Some of these services, which actively promote and provide access to cultural content, are wrongly claiming they are not liable, or at least not fully liable, for giving access to copyright protected works. Instead, they claim to be mere hosts, despite their very active role, and as such allege to be eligible to claim the protection of safe harbour provisions.

The economic weight of these platform–based services is significant. Some of them are owned and operated by the world’s largest corporations, yet according to CISAC’s 2020 Global Collections Report^{Footnote 1}, royalty collections by CISAC societies for the use of creative content online represented only 20.5% of overall collections. This low level of royalties is testament to the difficulties that authors’ societies have in licensing and enforcing the rights of creators. User uploaded content platforms routinely leverage the current legal framework to avoid obtaining licenses or extract below market rates for exploiting creative content. This has resulted in a plummeting share of revenues for authors while the online use of copyright content soars and online intermediaries generate huge revenues. This transfer of value from creators to these services is the most challenging issue in today’s digital environment.

The EU has been a pioneer in tackling the transfer of value issue with the adoption of the Directive 2019/790 on Copyright and Related Rights in the Digital Single Market in 2019 (“DSM Directive”), where European institutions approved the much-needed Article 17, which ends the safe harbour regime for “Online Content-Sharing Service Providers” (OCCSPs) such as YouTube or Soundcloud. This provision has been long sought after by creators and having it now recognised by the EU sets an important precedent, thereby paving the way for countries outside of the EU to follow.

The DSM Directive defines platform-based services, such as OCSSPs as information society services whose principal purpose, or one of its principal purposes, is to store and give the public access to a large amount of copyright-protected works or other protected subject-matters, uploaded by its users. The principle is that UGC platforms and similar Internet service providers such as OCSSPs are clearly not passive online intermediaries since they are actively organizing and promoting the content for profit-making purposes (art 2.6).

Consequently, the DSM Directive clarifies that this type of service providers

• undertake an act of communication to the public or an act of making available to the public and therefore should obtain an authorisation from rights holders (article 17.1);
• cannot benefit from the protection of the hosting services safe harbour under Art 14 of the E-Commerce Directive, with respect to their copyright-relevant acts (article 17.3);
• shall provide rightsholders with adequate information on the functioning of their practices both for licensing and enforcement (article 17.8), although no general monitoring obligation is established.

CISAC therefore, strongly urges the Canadian Government to update and clarify the liability of internet platforms, such as OCCSPs, by adopting a similar approach as in Europe so that the balance can be redressed for the benefit, not only of Canadian creators, but of creators of all nationalities whose works are massively used by Canadian service providers.

Also, CISAC suggests the following improvements to update the current safe harbour provisions of the Canadian law:

• The language in the current safe harbour exclusions is too broad. Only neutral online intermediaries who act in a passive, technical and automated manner with respect to copyright-protected content should be protected.
• The knowledge standard that applies to the “hosting” safe harbour should be lowered from the knowledge of a court order to an actual or constructive knowledge of infringement, such that once a host receives a notice of infringement from a rights holder or is aware of facts or circumstances where infringement would be apparent, that the “hosting” safe harbour no longer applies in case the hosting providers do not act expeditiously to remove the content.
• Require online intermediaries to comply with minimum standards to implement policies dealing with reporting of infringements and corresponding mechanisms to address such reports.

2/ Increase transparency in rights holders’ remuneration and online uses of their content

CISAC welcomes any initiative intending to improve transparency throughout the value chain. Indeed, some online intermediaries not only decline any type of copyright liability for the contents they transmit, they also refuse to comply with accurate and transparent reporting obligations on the usages that take place on their platform and the diverse ways they monetize or financially benefit from such contents.

Therefore, strengthening the obligations of online intermediaries with regards to the transparency and accuracy of information, is of utmost importance. Such transparency obligations should be clearly established in the law to help rights holders licence their rights, including for the calculation of the amounts to be paid as licensing fee, and also for monitoring the use of their works online for prevention and enforcement through adequate recognition tools. The recently adopted EU DSM Directive has taken steps in this regard by introducing in its article 17 (8) an obligation for OCSSPs to provide adequate information to rights holders on the functioning of their tools to ensure the unavailability of unauthorized content as well as on the use of rights holders’ content covered by a licensing agreement.

Cooperation between rights holders and platforms is key in this regard to ensure proper and effective tools are deployed. The use of automated content recognition technologies is absolutely crucial for licensing purposes and these technologies are essential to accurately identify which works are used, how much revenue needs to be distributed and to which creator. Introducing similar provisions in the Canadian Law will be instrumental in increasing royalties for creators by receiving all exploitation data in a timely manner and agreed format, and in monitoring the availability of their contents online.

Collective management organizations who are members of CISAC already operate in full transparency pursuant to CISAC’s Professional Rules. These Rules (publicly available on CISAC website) establish various mandatory reporting obligations which are monitored annually.

3/ Strengthen rights holders’ enforcement tools against intermediaries

CISAC stresses the need to provide rights holders with enforcement tools enabling them to ask online intermediaries to disable access to or remove unauthorized content from their platform. To date, these remedies are only available through Courts. They should however, be included in the law to create a streamlined process and an effective and expeditious enforcement tool to combat online infringement.

Also, online intermediaries should deploy technical tools in accordance with high industry standards of professional diligence to avoid the availability, on their services, of unauthorized works as identified by the relevant rights holders. The EU DSM Directive provides clear legal basis for the “notice-and-takedown” and “notice-and-stay down” systems, which could serve as reference for the Canadian law.

These enforcement tools are especially necessary in the case of Canada due to the amount of pirated content available. According to the European Commission Report^{Footnote 2} on the protection and enforcement of intellectual property rights in third countries published April 27, 2021, “(…) Canada remains a host to websites providing access to pirated content. In cases where the identity of the operator of the pirate site is unknown due to the use of services enabling anonymous registration of website domains, the problem seems to persist because right holders are not able to apply for an injunction against the intermediary aimed at preventing a continuation of a copyright infringement (e.g., website blocking).”

4/ Private copying

CISAC published in 2020 the Private Copying Global Study^{Footnote 3}, a detailed and comprehensive analysis of the state of private copying globally across 194 countries and 5 continents. Canada’s private copying regime is highlighted in the report as one of the most outdated around the world, being that its scope is limited to recordable CDs. As an effect of the widespread use of digital copies, this important source of income has declined dramatically over the past years, from a high of $38 million per year down to just $1.5 million in 2018^{Footnote 4}. It is now on the verge of disappearing entirely.

In contrast to the situation in Canada, the 2020 study reports that most of the countries with functioning private copying regimes – including Algeria, Austria, Belgium, Croatia, France, Germany, Hungary, Italy, Morocco, Netherlands, Paraguay, Portugal and Switzerland – extend levies to a wide variety of devices. In these countries, levy systems are constantly updated to keep them up with the pace of technological developments and new user behaviours. Worldwide, global collections for private copying rose from €669 million in 2015 to €1.046 million in 2018, with a relevant portion of these revenues originating from digital copies.

Private copying remuneration is an invaluable source of income for right holders. When correctly implemented, it is the only efficient mechanism that allows creators to be compensated for the widespread copying of their works for domestic use.

Private copying remuneration entails no significant extra costs for the technology and ICT industry that markets copy- enabling equipment or media and makes high profits from these sales. Indeed, the ability to make private copies of protected works is one of the reasons Canadians purchase these devices in the first place.

Therefore, we encourage the Canadian authorities to adopt a “technologically neutral” private copying regime, so that it could apply for all types of devices without requiring the law to be amended whenever a new device is created. Technologically neutral legislation will put lost revenues back into the pockets of the creators and music companies that earned them. With minimal revisions to the Copyright Act, the private copying regime would be restored to what it was originally intended to be – a flexible, technologically neutral system that monetizes copies not controlled by rights- holders and keeps up with changes in how Canadians consume music now and in the future.

We remain at your disposal for any information on private copying regimes in place in other countries.

CISAC would appreciate the opportunity to continue a dialogue with you in the coming weeks in order to work towards achieving a meaningful copyright framework for the creative community in Canada and we remain at your disposal for any additional information you may require or question(s) that you may have.

Yours sincerely,
Gadi Oron Director General