John Lorinc's Creators and Copyright Part III
As the federal government moves towards the next round of copyright policy reforms intended to modernize domestic legislation, Canadians need to scrutinize the impact of the previous set of amendments, which are now seven years old. The question is whether these legislative changes have undermined creators’ economic and moral rights in their intellectual property, and therefore impoverished the public realm. Such an analysis can be broken down into four parts: the consequences of the exceptions included in the 1997 amendments; the effectiveness of copyright collectives in compensating creators for foregone income due to legislative exemptions; the state of moral rights in Canada in the wake of the Théberge and Desputeaux rulings; and, finally, the issue of whether labour relations legislation directed at artists can be regarded as a means of providing creators with additional control over their works.
“The single copy exemption,” says a former chair of The Writers’ Union of Canada, “is a 30 million copy exemption.” That verdict sums up how many writers have come to view the long-term impact of the menu of exceptions appended to the Copyright Act in the 1997 reform package, and then buttressed by the precedent created in the Law Society’s Great Library case (which involved the making and distributing of copies of law reports by the library). Those exemptions were promulgated to achieve a variety of public policy objectives: enabling research and access to materials at libraries and museums; facilitating certain types of teaching practices; and providing support for individuals with various disabilities, to name a few. Such changes are also mandated in the name of maintaining a balance between copyright owners and users.
It is worth noting that the exemptions in the Act are overwhelmingly directed towards the written word -- articles, plays, tests -- although the list does include performances of live or recorded music in educational institutions and the recording of radio and TV broadcasts under certain conditions. The Section 92 review even raised the question of whether the exemptions should be extended to allow for the showing of films and videos in school settings. But the list of categories of copyright works not included under the 1997 exemptions is revealing: software, films and videos, database products such as CD-ROMs, etc.
The malleability of the stated policy principles can be illustrated by the fact that there may well be a defensible public interest in allowing, for example, the copying of computer programs for research or private study within a library. Moreover, many software companies now use so-called “shrink wrap” licenses – when the user unwraps the cover, they are deemed to have agreed to the conditions of the license, and these may even override any statutory exceptions. It remains unclear whether shrink-wrap licenses nullify the fair dealing rules. But the broader point is that clever technical measures ought not to be allowed to trump a practice as fundamental to the dissemination of knowledge as fair dealing.
It’s probably not a coincidence that the software industry, dating back to the early days of Microsoft, has been zealous about protecting its own copyright in order to counter the erosion of its economic franchise because of illegal duplication. Individual writers, who are most adversely affected by the new exemptions, simply don’t have the wherewithal to defend their intellectual property with the same kind of vehemence.
Some authors point out that the proliferation of exemptions has thwarted a more market-oriented negotiation process that should evolve organically between copyright owners (via rights collectives) and users or user groups, as has been the case with SOCAN and the broadcast industry. “Once you start adding specific exceptions for specific purposes into the legislation, there is a natural tendency for users to resort to exemptions, which puts the onus on creators to prove their work shouldn’t be exempted,” says one journalist and historian. “Access Copyright has major relationships with educational institutions because of course packs, but receives very little revenue from libraries because they fall under the single copy exemption.” As this writer points out, there’s nothing to preclude collectives and users who require some kind of `discount’ – e.g., those with perceptual disabilities – to work out an accommodation that achieves the same result, i.e., a voluntary license with little or no fee.
A journalist and critic cites her strange experience with that particular exemption. She discovered one of her books had been made into a “talking book” when she heard the recorded version had been nominated for a literary award offered by the Canadian National Institute for the Blind. It was the first she’d heard of the translation into audio form. No one had asked her for permission, nor consulted with her on editorial issues such as the choice of narrator, biographical details, etc. In fact, she was told she needed the assent of the publisher to obtain a copy. This anecdote illustrates that an exemption – even a well-intentioned one -- comes to be treated as more than just an economic benefit, and so encourages certain assumptions about what can be done with, and to, those copyright works subject to user-oriented provisions. “An exemption is not a license to take,” says the author, who is aware of other such cases.
Quite apart from the way exemptions encourage users to disregard broader intellectual property rights, creators must confront the question of the actual economic impact exemptions have had on both copyright owners and users. Can educational institutions, libraries, museums and archives demonstrate that they’ve been able to deliver the public policy goals set out in the 1997 reforms? And on the other side of the divide, what has been the economic impact, in terms of foregone royalty revenue, on those individuals whose work has been copied on the strength of an exemption? It is striking that the federal government didn’t bother to address either of these questions in its Section 92 review of the Copyright Act. This analytic gap would appear to be a grave error in both directions, because Canadians, at this point, can not say for certain whether the exemptions are providing the desired policy benefit, or, as some observers suspect, if they have inflicted hardship on creators by expropriating part of the value of their work.
It is interesting to note, in light of such criticisms, that the federal government’s earlier enthusiasm for the use of exemptions has, in fact, waned slightly in one particular area: inter-library loans of journal articles. Under the 1997 reforms, research libraries were given the authority to make electronic copies of journal articles and email these to other libraries as part of their inter-library loan service. The rider on the exemption, however, was that the article could only be delivered to the library patron in hard copy form, not electronically – a logistical detail designed to prevent unauthorized electronic copying, but one that irritates many academics, especially those from the U.S., where electronic delivery is allowed.
During the consultations in the latest chapter of the reform process, researchers and libraries lobbied to have the exemption extended to electronic delivery. But in the March, 2004 interim report on copyright reform, issued by the Standing Committee on Canadian Heritage, the committee members opted to side with journal publishers and authors by recommending that the solution lies in an extended collective licensing regime, not an enhancement of an existing exemption.
A collective society, according to University of Ottawa associate law professor Daniel Gervais, “is an organization that administers the rights of several copyright owners. It can grant permission to use their works and set the conditions for that use.” More generally, though, collectives are a means of creating markets where they would otherwise not exist, because authors and publishers, individually, could not license uses in response to countless demands for reproductions.
These operate under a handful of legal models and governance structures, and are subject to competition laws designed to prevent monopolistic behaviour. They collect royalty revenue through a range of methods, from tariffs set by the Copyright Board to voluntary fees, negotiations with users, and so on. Canadian collectives now deal with a wide variety of copyright situations, including photocopying, public performance of recorded music and representations of works of visual art. There’s also considerable variety in the ways in which collectives secure permission to represent the rights of creators; some, as has been described above, have little visibility, while others – especially those that deal with broadcast media -- are well known and represent a very large proportion of the creators and copyright owners operating in a given media.
The fundamental question creators have with respect to collectives is whether they are successful at distributing royalty revenues to individual artists. A report prepared for the Department of Canadian Heritage in 2001 by Prof. Gervais offered a snapshot of the economic clout of selected Canadian collectives relative to other jurisdictions. In 1998, SOCAN’s revenue per capita stood at $2.53, compared with $2.50, $3.66 and $4.20 for musicians/songwriters’ rights collectives in the U.S., France and Germany, respectively. With reprography collectives, Canada’s per capita ranking was slightly closer to the middle of the pack, standing at 52 cents, compared with 28-cents and 34-cents for the U.S. and Germany. The Scandinavians, however, achieved per capita rates from 92-cents to $5 (all figures in U.S. dollars).
The following list itemizes creator collectives’ that have disclosed financial data:
On the surface, it would appear that collective revenue is increasing at a healthy pace in Canada. But the gross figures don’t tell the full story because there’s some evidence that a significant proportion of the money for some collectives isn’t filtering down to creators. Access Copyright is a particularly vivid example: when CanCopy was initially set up, writers and publishers negotiated a 65-35 split in the collective’s revenues for magazines, and a 60-40 split for trade books, with a roughly equal sharing of revenues anticipated. Over time, the ratio has shifted: individual writers affiliated with Access Copyright receive at least 50% of the total payment allocated to the copying of a particular book or publication. However, payments to most unaffiliated creators (including most textbook authors) reach them through their publishers, who are obligated to pay in accordance with their contracts with those creators. In recent years, splits may have been roughly 70-30, although Access Copyright does not collect precise data.
A related issue has to do with the financial structure of the collective ‘sector’ itself. While collectives have generated new sources of income for creators, the revenue/expense ratios indicated above show that several of these organizations struggle to control their administrative costs – an operational issue that obviously has a direct bearing on creator royalty incomes. Since the 1997 reforms to the Copyright Act, there has been a significant expansion of collective management in Canada; today, some 36 copyright collectives operate in Canada, including several pairings of French and English-language collectives serving the same “market” (e.g., music, reprography, etc.). “Canada has by far the largest number of CMOs, especially in relation to the country’s population,” Gervais writes. “The number of collectives is probably too high and it seems unlikely that all can survive in a limited market.” The federal government, in its Section 92 report, contends that it has undertaken “concrete measures” to streamline the collective sector.
This is the backdrop to the pressing question – a “critical juncture” in Gervais’ words -- of how collectives can adapt themselves to provide digital licensing as a means of controlling the transmission of copyright works over the Internet.
Some collectives already offer limited licensing for digital material. For instance, in March, 2004, the Playwrights Guild launched a “virtual library and bookstore” as an online source of English Canadian drama delivered to the public through Access Copyright. Users can browse unpublished plays and purchase licenses via the Access Copyright website. And while it does not yet authorize digital use or storage in its comprehensive or blanket licenses that cover its repertoire, Access Copyright does offer digital licenses on a “transactional basis” for activities such as scanning works under license.
Ottawa, meanwhile, has established a $3 million Electronic Copyright Fund to “simplify the licensing process” on the part of collectives and provide resources for the digitization of Canadian culture. And the government, in a status report on copyright reform presented by the ministers of Heritage and Industry in March, 2004, identified the need to protect electronic “rights management information” from tampering as a means of identifying copyright material in digital form -- an important step in helping collectives administer royalties from authorized digital uses.
In Gervais’ view, Ottawa’s key move in this direction would be to pass legislation that allows collectives to introduce “extended licensing” – i.e., a measure that allows a collective to extend its licensing authority to all national and foreign rights holders in a given category when it reaches a certain threshold of voluntary members. Effectively, Gervais argues in a paper commissioned by Canadian Heritage in 2003, such a rule “accelerates” the acquisition of rights and thus the granting of permissions. Such a move would benefit newer and smaller collectives, he states, but also rights holders. “[They] have the advantage of better protection of their rights, and by presenting a unified front they increase their clout in negotiations with users. Finally, non-represented rights holders also have their rights protected and can benefit from the remuneration they deserve, since their works are being used for the benefit of the general public.”
Despite that, the federal government’s latest pronouncement on copyright reform – the Interim Status report issued in March, 2004 – is silent on the evolving role of collectives and the use of extended licensing.
As indicated earlier, Canadian copyright law draws on two sets of legal and political traditions – English and French – and for this reason has accorded legislative recognition to moral rights, albeit in a watered down form. The current Copyright Act includes 13 clauses which set out Canada’s policy on moral rights. Under the provisions of the law, these provide authors with the right to use their name or a pseudonym or to remain anonymous. The law also states that distortions, mutilations or unauthorized modifications represent an infringement of moral rights where done without the author’s permission and, with certain exceptions, in a way that prejudices the author’s reputation. Finally, the Act establishes the same penalties that are provided for copyright infringement.
In keeping with their philosophical origins, moral rights may not be assigned under Canadian law, but, strangely enough, they can be waived. In other words, though a creator is considered under international human rights covenants to have an indivisible connection to their work, Canadian law allows authors to actually surrender their very authorship, possibly for financial compensation (France and Germany do not permit the waiver of moral rights.) Similarly, moral rights expire when copyright does, which is another apparent contradiction between Canadian law and the fundamental construction of the concept of moral rights.
One of the pivotal questions is the relationship between moral rights and the economic rights arising from copyright. Reputation, according to Normand Tamaro, is the link between the two. In myriad ways – a reporter’s presumed credibility, the authenticity of an artist’s paintings, etc. – reputation is inextricably bound to the earning power of a creator. Rightly or wrongly, reputation opens doors, paves the way for new commissions, attracts serious consideration from critics, and so on. In both the Théberge and Desputeaux rulings, however, the commercial interests on the part of gallery owners and the publisher, respectively, were afforded sufficient legal recognition as to significantly dilute the creators’ moral rights.
During the current copyright reform process, there has been some debate within the government and among stakeholder groups about the need to shore up some of the Act’s moral rights provisions, for example, by extending such protection to performers. But some creators and intellectual property experts question this approach, arguing that the federal government, in the wake of the Théberge and Desputeaux decisions, desperately needs to look at the big picture before further tinkering with the Act’s moral rights provisions. As Tamaro asks, “We may wonder how important the author’s reputation is after the Théberge and Desputeaux decisions.”
The case for undertaking such a high level review of basic principles is made that much more pressing because of the advent of digital technology. Given that so much creative work can be now replicated in malleable electronic formats, the risk of unauthorized alteration has never been greater. Take the case of an illustrator who “sells” a painting to a publisher, who maintains the image in a JPG file. At some point, an ad agency approaches the publisher, seeking permission to reproduce the painting in an advertisement. The publisher agrees, and passes along the JPG file, whereupon the agency’s designers electronically alter the file by inserting in it an image of a consumer product. Even if the author freely sold the image and waived moral rights to it, has his or her reputation been affected by this modification? “Common sense,” in Tamaro’s words, would say the answer is clearly yes. But Canadian law, in its present condition, suggests otherwise.
As is clear from the foregoing sections, there’s a great deal of variation in the type of representation creators and artists enjoy – ranging from actors supported by an active and well-organized union, to freelancers who consider themselves small businesses and belong to no organizations at all. Some creators’ unions are quite new. Other creator groups enjoyed more clout in the past, and have seen their influence diminish over time, for various reasons. Lastly, many creators belong to other collective or professional organizations – e.g. teachers’ unions – because they need to have “day jobs” to subsidize their creative work.
The challenge of creating effective labour legislation specifically tailored for independent artists is not new, and the issues remain fundamentally unchanged. Many creators are self-employed, maintain one-to-one relationships with a range of clients, and function as small businesses. The traditional concepts of labour law – a physical workplace, occupational safety, bargaining units, a formal salary-based employee-employer relationship, seniority, etc. – do not apply to the way many independent creators conduct their professional lives (the long-established exceptions, as noted above, are those involved in theatre, television and film). Rather, they work in studios, home offices, and coffee shops. And they may place a high value on their independence.
In the past, various attempts have been made to create an improved labour relations environment for different types of creators. During the 1980s, the Writers’ Union of Canada attempted to negotiate standard contract provisions – a.k.a. minimum terms agreements -- with the Association of Canadian Publishers. But the ACP pulled out at the last moment, saying it had been advised that such a move constituted a breach of the provisions of Canada’s competition act that restrict monopolies. Instead, the ACP offered up only a voluntary code of practice, which TWUC declined to endorse. Subsequent attempts to negotiate minimum terms agreements with individual publishers have also failed. Similarly, at various times, the Periodical Writers Association of Canada has attempted to gain acceptance for the establishment a standard freelancer contract, but with little success in having it adopted and used by publications.
In 1995, the House of Commons gave royal assent to the Status of the Artist Act. At the time, the latest national census had estimated that artists accounted for about a quarter of the cultural labour force, and represented the fast-growing occupational category in the overall labour force. Canada’s official recognition of the problem of low artist incomes dates back to the 1951 Royal Commission on the National Development of Arts, Letters and Sciences (the so-called Massey Commission). But the Status of the Artist legislation per se traces its origins to a 1980 UNESCO declaration, which led, in Canada, to a series of taskforces recommending various solutions, including favourable tax treatment, stronger copyright protection and collective bargaining for artists’ groups (as proposed in 1990 by the Standing Committee on Communications and Culture).
The 1995 legislation had two parts: the Act established a (short-lived) council comprised of individual artists, and its mandate was to advise the government on how to improve working conditions for creators. But the council lacked strong links to established arts groups, and was eventually disbanded.
The second part of the Act allows artists organizations to apply for certification to the Canadian Artists and Producers Professional Tribunal. In theory, artists’ organizations that obtain certification have the legal right to negotiate so-called “minimum terms agreements” for independent artists working within federal jurisdiction (e.g., broadcasters, National Arts Centre, government departments, Canadian museums, etc). Such contracts apply to all creators, whether they are full or part-time, and whether or not they belong to the certified organization.
According to a recent consultant’s review of the legislation conducted for the Department of Canadian Heritage, 15 artists’ organizations had been certified by the Tribunal as of March 2001, seven of which had negotiated a total of ten first agreements between them. These fifteen included Canadian Actors Equity, Canadian Association of Photographers and Illustrators in Communications, PWAC, the Writers Guild, ACTRA, Playwrights Guild, the American Federation of Musicians, TWUC, and Canadian Artists Representation.
One of the latest is the Guild of Canadian Film Composers, which obtained certification under the Act in May, 2003, allowing it to negotiate collective agreements with producers such as the NFB, the CBC and television broadcasters in all parts of Canada except French Quebec. The certification covers all composers, arrangers, orchestrators, and music editors, whether or not they belong to the GCFC.
The consultant’s review identified the Act’s limited scope as its key weakness, a point made by most critics of the legislation. Creators work mostly under provincial jurisdiction, and thus the producers they usually deal with, are beyond the reach of the Act. The Canadian Conference of the Arts, in a submission, noted that the law doesn’t propose solutions to broader economic issues facing artists – e.g. favourable tax treatment for copyright income. In Ireland, according to the report, all artist income is tax exempt, while Quebec exempts the first $30,000 of income from royalties earned on copyright material.
More significantly, the Act covers only a “modest” amount of cultural activity, and the Tribunal has turned down attempts to extend the law’s coverage. For example, PWAC sought, unsuccessfully, to have newspapers included – in effect, to establish PWAC as the bargaining agent for freelance writers selling electronic rights to daily publications for use in databases.
In some sectors, like television production, private broadcasters like CTV and CanWest Global, as well as independent producers that provide programming from the CBC, have argued that they are provincial entities, beyond the reach of the federal statute. A loophole? The AFM believes so, arguing that private broadcasters, airing the work of independent producers, come under the jurisdiction of the CRTC and should therefore be subject to the federal status of the artist rules.
Ottawa has recognized the law’s limitations, but hopes it will become a model for somewhat broader status of the artist legislation at the provincial level. To date, Quebec has enacted such a law, which pre-dates the federal Act, and Saskatchewan’s version offers a more limited approach. The Liberal government of Dalton McGuinty, in Ontario, included Status of the Artist legislation in its 2003 election platform. Currently, arts groups, including Canadian Actors’ Equity Association (CAEA), are participating in a working group to develop draft Status of the Artist legislation for Ontario.
There are many people in the arts world who feel that Status of the Artist legislation is an attractive solution to some of the most persistent problems facing creators -- poor earning capacity, loss of control over intellectual property, lack of clout with producers, etc., all of which could conceivably be addressed with minimum terms contracts. These would provide a floor, in terms of fees, moral rights, and so on. And by virtue of establishing minimum conditions, they would take some of the inherent inequity out of the negotiations between freelance creators and large organizations or companies.
And groups such as the CAEA have put a “high priority” on getting such laws in place because of the deleterious impact of Canadian Revenue Agency (CRA) rulings that deem some performers to be employees, for tax purposes, rather than independent contractors.
As an article in the September, 2004 CAEA newsletter put it, “In the past tax laws respected the principles of the Status of the Artist Act. Historical agreements with Revenue Canada and Human Resources Development Canada support arguments that the CRA had promised to treat performing artists as independent contractors – artists who have voluntarily walked away from benefits over the past 30 years in order to retain independent contractor status.
“In light of recent decisions by the CRA and the potential liabilities to artists, a strategy for dealing with this branch of the government must be developed, not just at Equity but with all arts organizations across the country.”
It’s obvious that Status legislation is most likely to succeed in sectors that generate large revenues, and have a limited number of producers. There are a finite number of theatres or television production companies. The same can be said of daily newspapers, almost all of which are accustomed to negotiating terms with unions representing their editorial employees. At the same time, the universe of organizations that commission freelance writing is vast, and a certain amount of it functions outside the logical parameters of copyright law (e.g., many freelancer write for newsletters or compose speeches, activities where the subsequent economic value of the copyright is negligible).
The issue at the heart of this discussion is whether a creator’s ability to profit from the copying of their work is best enhanced by such legislation, or by a more comprehensive approach to collective rights management, or by some combination of the two sets of policy tools. Furthermore, the prospect of such legislation raises a host of important questions that need to be considered carefully:
The Guild of Canadian Film Composers grappled with several of these questions as it moved towards certification as an artists’ organization last year (2003). The members had traditionally “distanced” themselves from unionization, and the GCFC will not become a union, even though it now collects some dues and pension contributions from producers. It will move from promoting suggested model contracts to collective bargaining for minimum terms agreements. As for copyright, the GCFC has pursued what it considers to be a ground-breaking bargaining strategy. It negotiated agreements with SOCAN and SODRAC “that acknowledge the GCFC’s right to represent composers’ rights for works not represented by the other copyright collectives,” according to Paul Hoffert. “If a broadcaster opts for a modified blanket license from SOCAN for a TV program, and SOCAN grants the performing rights back to the composer for the musical works in that program, the GCFC now represents those works for collective bargaining with the broadcaster.”
Report ©2005 John Lorinc. Introduction ©2005 Bill Freeman. This study was produced by the CCC for Canadian creators. You may reproduce this work for non-commercial, purposes, without alteration or amendment, in whole or part, provided you give credit to the authors and source, so please feel free to disseminate and share freely. A licence for commercial use of this work is required and may be obtained from Access Copyright, Copibec, the Creators' Copyright Coalition, or the authors. This study was conducted with funding from the Department of Canadian Heritage • Webpage design ©2005 Patrick Davidson of Primary Sources • The outline map of Canada used in the logo is from The Atlas of Canada, as compiled and produced by Natural Resources Canada, and is used with permission