Digital Copyright Reform in Canada

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US Copyright Law

American and Canadian copyright law share a common history and thus encompass similar principles. However, there are some elements of US copyright law that differ significantly from its Canadian counterpart. Among these are the constitutionalization of the federal government's power to promote "Progress of Science and useful Arts" through its administration of copyright law, provisions for secondary infringement, and fair use provisions. Each will be reviewed briefly below.

The Purpose of Copyright Law

Under Article I, Section 8, Clause 8 of the US Constitution, the federal government has the power "to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”

Copyright in American law is thus based on the desire to promote the progress of arts and science. Giving effect to this overarching objective necessarily involves striking a balance between the rights of creators to protect their works, and the rights of users to access and use those works. If rights are too strongly protected, the free flow of information and ideas, and presumably creativity and new expression, may be unduly restricted. Conversely, weak protection for creators presumably leads to a lack of incentive for further creation.

American courts generally take the position that copyright must balance the rights of owners and users as to produce the optimum output of creative works. The underlying theory recognizes that the public interest lies in producing the maximum number of works and this requires giving consideration to user and owner rights.

In contrast, Canadian copyright law has no constitutionalized provision delineating the purpose of copyright laws. As a result, copyright law has historically function more as a mechanism to protect creators, rather than a system designed to promote innovation and creativity. However, a recent line of cases demonstrate that Canadian courts have moved in a direction more cognizant of user rights. See the Copyright in the Public Interest section for more information.

Indirect Infringement

It has been established through US jurisprudence that under appropriate circumstances, one person may be held liable for the infringement of another. In cases where one person facilitates the infringement by another, the facilitating party may be held liable for copyright infringement. There are two common law doctrines of indirect infringement -- vicarious liability, and contributory liability.

Under vicarious liability, liability will be imposed upon those who have the power to supervise or control the infringer and a financial interest in the fruits of the infringer’s activities. This applies even if the controller has no knowledge of the infringement. For example, the parent corporation of a chain of stores will be held liable for the selling of counterfeit merchandise by the franchisee (see Shapiro, Bernstein v. HL Green 326 F.2d 304 (2nd Cir. 1963)).

Under contributory liability, liability will be imposed on one who, with knowledge of the infringing activity, induces, causes, or materially contributes to the infringing conduct of another.

In the digital era, these two types of liability have been explored as a way to impose liability onto those who provide technologies or services that are or can be used to infringe copyright - for example, recording devices or peer-to-peer networking services. According to US courts, the fact that a product can be used for purposes of copyright infringement is not enough for the imposition of liability on the manufacturer of the product. Liability will not be imposed if the product is capable of substantial non-infringing uses. For example, a VCR is capable of being used for legitimate, fair use purposes such as recording a program for later viewing, so manufacturers cannot be held liable for infringement by users (see Sony Corp. v. Universal City Studios, 464 U.S. 417 (1984)).

More recently, however, US courts have held that peer-to-peer filesharing networks can be found liable if their activities induce users to breach copyright, even when the service could be used for non-infringing uses (see MGM Studios, Inc. v. Grokster, Ltd. 545 U.S. 913 (2005)). See the EFF's summary for more information abour peer-to-peer and secondary liability.

In Canada, indirect infringement is dealt with under section 27(2) of the Copyright Act, and is known more generally as "secondary infringement." Under this section, those who distribute, exhibit, sell or rent works that they know (or ought to know) are infringements are also held liable for infringement. Unlike vicarious liability, secondary infringement imports a knowledge requirement.

Fair Use

Section 107 of the US Copyright Act is better known as the "fair use" doctrine, which permits some copying and distribution without permission of the copyright holder or payment. Fair use includes uses for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research.

In contrast to the Canadian doctrine of fair dealing, the list of purposes and the factors to be considered are not exhaustive, meaning that the above list is merely illustrative of a potentially much broader set of uses. Indeed, US courts more recently expanded the list of fair purposes to include parody or satire, indicating that the fair use provisions are more liberally interpreted than in Canada.

If the use falls into one of the enumerated categories (or a new category, should the court choose to create one), then the question remains as to whether that use was "fair." US jurisprudence has developed a set of four factors to help make this determination, each of which will be examined briefly below.

Purpose of the Use
This factor asks whether the use in question helps fulfill the intention of copyright law to stimulate creativity for the enrichment of the general public, or whether it aims to only "supersede the objects" of the original for reasons of personal profit. Often referred to as the "transformative factor," one must demonstrate how the use either advances knowledge or the progress of the arts through the addition of some new expression or meaning. The fact that the copyrighted work is used for a commercial reason may be relevant, but does not necessarily preclude a finding of fair use.

Nature of the Copyrighted Work
Although the availability of copyright protection should not depend on the artistic quality or merit of a work,the fair use analysis considers certain aspects of the work to be relevant, such as whether it is fictional or non-fictional. Another aspect that may be relevant is the public interest in the dissemination of the work. The social usefulness of freely available information is relevant when weighing appropriateness of a fair use exception. For example, the Zapruder film of the assassination of President Kennedy was copyrightable, but in the name of the public interest, reproduction of stills of the film in a historical book was considered to be fair use (see Time Inc. v. Bernard Geis Associates, 293 F. Supp. 130 (S.D.N.Y. 1968)).

Amount of Copying
This factor assesses the quantity or percentage of the original copyrighted work that has been imported into the new work. In general, the less that is used in relation to the whole (e.g., a few sentences of a text for a book review), the more likely that the sample will be considered fair use. However, copying of only a small amount of the work may be infringement when that segment goes ‘to the heart’ of the work.

Effect upon the work's value
This factor considers the effect that the allegedly infringing use has had on the copyright owner's ability to exploit his original work. The court not only investigates whether the defendant's specific use of the work has significantly harmed the copyright owner's market, but also whether such uses in general, if widespread, would harm the potential market of the original. In evaluating the fourth factor, courts often consider two kinds of harm to the potential market of the original work. First, whether the use in question acts as a direct market substitute for the original work (i.e. that by allowing the infringing use, the sales for the original work would be harmed). Second, courts also consider whether potential market harm might exist beyond that of direct substitution, such as through the potential existence of a licensing market.

Notably, these factors are intended to be weighed and assessed on the whole and in light of each other, giving the court a considerable amount of flexibility. For further reading on the US Fair Use doctrine, see the Stanford Copyright & Fair Use Overview.