Consultation on a Modern Copyright Framework for Online Intermediaries

The federal government has put out a consultation call for comments on how to modernize our copyright regime for Online Intermediaries. If you hop in a slightly modified DeLorean or a Way Back machine (our nod to well-known copyright protected audiovisual productions that could be subject to online piracy) and recall 2012’s modernization of the Copyright Act (the “Act”), when the Act was expanded to include protections for copyrighted works in the age of the Internet, much has changed since then. Content is inhaled, often binged, online whether legally or illegally. Content creators, rights holders, consumers, and Online Intermediaries have converging and diverging interests when it comes to the accessibility of content online. The government had previously published their findings from each of the Parliamentary Review of the Act conducted by the Standing Committee on Industry, Science and Technology ("INDU") and the Standing Committee on Canadian Heritage ("CHPC"), which we previously reported on in our 2019 Copyright Year in Review, and in 2021 it seems momentum is building on following up on the recommendations from each of the aforementioned committees as Canada tries to navigate our ever evolving digital world. Both INDU and CHPC found that Online Intermediaries must bear a measure of accountability, but INDU did not advocate for change to the safe harbour provisions under the Act, and CHPC stated that where an Online Intermediary is a content distributor, there needs to be accountability. Other measures to benefit content creators/rights holders included calls for transparency in the calculation and distribution of royalties by collective societies and the availability of net neutral court-ordered injunctions.

The goal of this consultation is three-fold: (a) to protect and encourage the use of copyright-protected content online; (b) to safeguard individual rights and freedoms in an open Internet; and (c) to facilitate a flourishing digital market. Without fair remuneration to content creators and rights holders for the exploitation of their content online, what incentive is there for them to allow the content to be accessible on the Internet? Furthermore, if the content is vulnerable to piracy and no cost-effective accountability for the violation of and enforcement of rights by the players in the space exists, then there’s even less incentive to make the content available online – or even to create content.  Copyright is meant to protect a creator’s/rights holder’s ownership and pecuniary interest in the protected while allowing people to use the work. Without updating our copyright laws to allow for the exchange and consumption of such content, while balancing creator and user rights and upholding net neutrality, casts Canada back into the pre-Internet darker age.  Online Intermediaries or “web giants” are either passive (e.g., Internet service providers (“ISPs”), data storage, web hosting, etc.) or active (e.g., content aggregators, social media platforms, etc.) organizations involved in the dissemination of protected works, and they need to continue to be able to do so without being faced with cost-prohibitive or draconian legal measures that make it unpalatable or even impossible (in certain cases) to make the content available online. For the Canadian digital marketplace to thrive, content creators and rights holders must be able to enforce their rights with the Online Intermediaries having cost-effective tools to use to help protect protected works from piracy without creating market barriers (read: high consumer costs due to copyright enforcement) for consumers to pay for their services.

Online Intermediaries are the nerve center of content dissemination and consumption. As part of the 2012 modernization of the Act, Canada adopted a “notice-and-notice” regime: once the Online Intermediary receives notice from a content creator or rights holder that their copyrighted work is being infringed, the Online Intermediary then notifies the alleged infringer. Unlike the “notice-and-takedown” and “notice-and-stay down” regimes of the U.S. and UK/EU, respectively, removal of the infringed work(s) requires further legal steps, namely via monetary remedies, injunctions, de-indexing (see Google Inc. v. Equustek Solutions Inc., 2017 SCC 34), and site-blocking (see Bell Media Inc. v. GoldTV.Biz 2019 FC 1432) orders. Under the “notice-and-notice” regime, the Act does not mandate that the Online Intermediary remove the infringed content or stop the infringement. While there are provisions in the Act that impose liability on Online Intermediaries if they are serving the primacy purpose of infringement, they are otherwise protected from liability if they do not engage in infringement and simply act as the conduit or the “pipes” used by the infringer to violate the copyright in the protected works. These “safe harbour” provisions under the Act provide, with limitations, for the circumstances where an Online Intermediary is a “mere conduit”, a “caching” or storage site for the efficient access of content as data, or a “host” where the Online Intermediary acts as the memory only for the infringer to then telecommunicate the work via the Internet. Other jurisdictions have more stringent regimes. For example, while the E.U. and U.S. have safe harbours, they include positive obligations to remove infringing content or disable access under certain circumstances. The UK and Australia have enabled access to site-blocking orders under robust criteria, something which Canada’s Federal Court considered in Bell Media when it issued Canada’s first site-blocking order, which we reported on here. In Bell Media, the Court clarified that site-blocking orders may be available as an enforcement mechanism to force ISPs block access to websites enjoined from hosting infringing content, under the right conditions.

Reconsidering our copyright enforcement framework for Online Intermediaries is a matter of keeping up with the Joneses as other jurisdictions are making changes to their enforcement regimes. The E.U. changed its “hosting” safe harbour provision to require the Online Intermediary to get the express permission of rights holders to stores the content in its memory or it will face liability. To comply, an Online Intermediary has a “notice-and-takedown” obligation, and if the rights holder requests it, they may have to comply with a “notice-and-stay down” obligation. And, in the U.S. they have issued a report that speaks to their regime being unbalanced regarding rights holders.

Significant reforms to the existing provisions under the Act for explicit liability for services provided primarily for the purpose of enabling infringement, and safe harbour protections without "notice and stay-down" or "notice and takedown" obligations, are not under consideration at this time. However, options that could be considered include:

1. Clarifying safe harbours’ conditions or obligations (e.g., improved protections via greater oversight of potential infringements facilitated by Online Intermediaries, incentivize Online Intermediaries entering into equitable licensing agreements with rights holders for use of content);
2. Adjust Online Intermediaries’ knowledge of infringement requirements to be excluded from safe harbours by broadening the parameters of knowledge. Currently, the existing "hosting" safe harbour currently excludes an Online Intermediary that knows of a court ruling against a copyright infringer that stored content in the host's digital memory. For example, upon receipt of an infringement notice, actual knowledge could be deemed, but not impose positive obligations to monitor all users’ activities or stop infringement;
3. Modify the application of harbours only where an Online Intermediary remains neutral such as when they are a mere conduit and having no active role in the copyright infringement, and/or they apply only if the Online Intermediary has no financial stake in the infringement;
4. Create notification and action mechanisms that require Online Intermediaries to be notified of infringement and to actively do something justifiable in response to the notice (e.g., “disabling access to the content at issue, removing it or otherwise preventing or stopping the allegedly infringing activity; offering to remunerate the complainant for the use at issue; or limiting, suspending or terminating the intermediary's services to the alleged infringer”); and
5. Implement mechanisms for dealing with repeated alleged infringers (e.g., “limitation, suspension or termination of an intermediary's services to the alleged infringer”).

Additional or alternative options center on creating a new collective licensing scheme for content creators/rights holders and Online Intermediaries that include: (a) a compulsory licensing scheme allowing for the upload of content without obtaining the content creators/rights holders consent, and this could apply to certain types of works; and/or (b) extend existing collective licensing schemes with collective societies that requires content creators/rights holders to authorize the uploads. Furthermore, there is greater need for transparency in the calculation and distribution of royalties to improve content creators/rights holders’ bargaining power. For certain Online Intermediaries, transparency could include tracking and disclosing certain information¹, and for collective societies could be required to explain how royalties are generated and calculated.

In addition to the foregoing, the Act could be amended to provide for site-blocking and de-indexing orders against Online Intermediaries via a court process to ensure procedural fairness, but without first having to obtain a judgment against the infringer or including the infringer as a party. This could streamline the content creators/rights holders’ ability to protect their content more expediently and efficiently from infringement while placing Online Intermediaries, even if acting as a mere conduit, in an active role to help stop the infringement. At the end of the day, under the foregoing scenario the rights of the content creators/rights holders, Online Intermediaries, alleged infringer, and public consumer would likely be balanced.² Other suggestions include reducing a plaintiff’s burden of proof to establish that an Online Intermediary exists for the primary purpose of infringement and updating certain criminal offences under the Act to ensure technology neutrality without criminalizing users.

Given the constant evolution and growth of the Internet and exploitation of copyrighted works online, the existing copyright legislative frameworks presents enforcement challenges in the realm of online piracy and copyright infringement. While a trip back to the future would be a utopian way to figure out how to resolve this problem, without the advent of time travel (Albert Einstein, we could use your help here!) and no modified DeLorean at our disposal, the government hopes that the public will have ideas to amend the Act to provide for robust protections for copyright owners and creators with a little more help from Online Intermediaries. Comments are due by May 31, 2021 and may be e-mailed to copyright-consultation-droitdauteur@canada.ca.