Insight Conference: RIGHTS and COPYRIGHT

Bringing Canada into the 21st Century

December 8, 2010

Bill C-32: Legal Protection for TPMs

barry b. sookman
bsookman@mccarthy.ca
416-601-7949

9887585 1
Topics
¬ Does Bill C-32 properly implement the WIPO Treaties consistent with
approaches used by Canada’s trading partners?
¬ Does Bill C-32 permit circumvention of TPMs to permit copying for fair dealing,
educational and other purposes?
¬ Does Bill C-32 have a flexible framework to permit new exceptions to be made by
regulation?
¬ Can the WIPO Treaties be implemented by limiting protection to circumvention
for the purposes of infringement?
¬ Should circumvention of TPMs for private copying purposes be permitted?
¬ Are private copying exceptions “user rights” that trump legal protection for TPMs?
¬ Do other jurisdictions permit an exception for private copying to trump TPMs?
¬ Would an exception for private copying that permits circumventing TPMs violate
the Berne Three Step Test?
¬ Can the WIPO Treaties be complied with by permitting circumvention of TPMs for
private copying?
¬ Does Canada have any trading partners that have private copying, no levy, and
permit circumventing a TPM for private copying?

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Does Bill C-32 properly implement the
WIPO Treaties consistent with approaches
used by Canada’s trading partners?

3
What Are The Requirements For Complying With The WIPO
Treaties?

¬ Contracting Parties may only be sure that they are able to fulfill their obligations
under Article 11 of the Treaty if they provide the required protection and
remedies:
¬ (i) against both unauthorized acts of circumvention, and against the
manufacture, importation and distribution of circumvention tools and the offering
of services for circumvention);
¬ (ii) against all such acts in respect of both technological measures used for
“access control” and those used for the control of exercise of rights, such as
“copy-control” devices;
¬ (iii) not only against those devices whose only – sole – purpose is
circumvention, but also against those which are primarily designed and produced
for such purposes
¬ (iv) not only against an entire device which is of the nature just described
but also against individual components or built-in special functions.

¬ Guide to the Copyright and Related Rights Treaties Administered by WIPO,

November 2003, at para CT11.16.

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Bill C-32 – TPM definitions
Industry Canada Fact Sheet: “The bill recognizes that certain protections, such as restricted
content on news websites or locked video games, are important tools for copyright owners to
protect their digital works and are often an important part of online and digital business
models. While the music industry has moved away from digital locks on CDs, they continue to be used in
many online music services. Software producers, the video game industry and movie distributors also
continue to use digital locks to protect their investments. Canadian jobs depend on their ability to
make a return on their investment. Businesses that choose to use digital locks as part of their
business models will have the protection of the law.”

¬ “technological protection measure” means any “circumvent” means,

effective technology, device or component that, in
the ordinary course of its operation,
¬ (a) controls access to a work, to a perform- er’s
performance fixed in a sound recording or to a
sound recording and whose use is authorized by
the copyright owner; or
¬ (b) restricts the doing — with respect to a work,
to a performer’s performance fixed in a sound
recording or to a sound recording — of any act
referred to in section 3, 15 or 18 [infringement]
and any act for which remuneration is payable
under section 19 [royalties].
(a) in respect of a technological protection
measure within the meaning of paragraph (a) of
the definition “technological protection measure”,
to descramble a scrambled work or decrypt an
encrypted work or to otherwise avoid, bypass,
remove, deactivate or impair the technological
protection measure, unless it is done with the
authority of the copyright owner; and
(b) in respect of a technological protection
measure within the meaning of paragraph (b) of
the definition “technological protection measure”,
to avoid, bypass, remove, deactivate or impair the
technological protection measure.

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 Technological Protection Measures (TPMs)
¬ 41.1 (1) No person shall
¬ (a) circumvent a technological protection measure within (ii) the uses or purposes of the technology, device or
the meaning of paragraph (a) of the definition component are not commercially significant other than
“technological protection measure” in section 41; when it is used for the purposes of circumventing a
technological protection measure, or
¬ (b) offer services to the public or provide services if
(iii) the person markets the technology, device or
(i) the services are offered or provided primarily for
component as being for the purposes of circumventing
the purposes of circumventing a technological
a technological protection measure or acts in concert
protection measure,
with another person in order to market the technology,
(ii) the uses or purposes of those services are not device or component as being for those purposes.
commercially significant other than when they are
Exceptions to infringement:
offered or provided for the purposes of
circumventing a technological protection measure, 1. Law enforcement and national security (s.41.11)
or
2. Interoperability of computer programs (s.41.12)
(iii) the person markets those services as being for
3. Encryption research (s.41.13)
the purposes of circumventing a technological
protection measure or acts in concert with another 4. Protection of personal information (s.41.14)
person in order to market those services as being
for those purposes; or 5. Computer and network security (s.41.15)

(c) manufacture, import, distribute, offer for sale or rental 6. Perceptual disability (s.41.16)
or provide — including by selling or renting — any 7. Broadcast undertakings (s.41.17)
technology, device or component if
8. Radio apparatus (s.41.18)
(i) the technology, device or component is designed
or produced primarily for the purposes of
circumventing a technological protection measure,

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The C-32 TPM provisions are consistent with the WIPO Treaties
and permit copy control circumvention for fair dealing purposes

Act of Act of Circumvention

Circumvention
Circumvention Circumvention- Tools-
Tools- Access
- Access Copyright Copyright Criminal
Country Control
Control Control Control Sanctions
Technological
Technological Technological Technological
Measure
Measure Measure Measure

United Prohibited (§ Not prohibited Prohibited (§ Prohibited (§

§1204
States 1201 (a)(1)) (by DMCA) 1201(a)(2)) 1201(b))

Remedies must
EU be “effective,
Prohibited (Art. Prohibited (Art. Prohibited (Art. Prohibited (Art.
Copyright proportionate
6(3); Art. 6(1)) 6(3); Art. 6(1)) 6(3); Art. 6(2)) 6(3), Art. 6(2))
Directive and dissuasive”.
(Art.8)

Not Prohibited
–permits
Criminal
circumvention
sanctions in
Canada Prohibited for fair dealing, Prohibited Prohibited
Commercial
education and
Cases
other
purposes.

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Regulations to Deal With Unintended
Consequences
41.21 (1) The Governor in Council may make regulations excluding
from the application of section 41.1 any technological protection
measure that protects a work, a performer’s performance fixed in a
sound recording or a sound recording, or classes of them, or any class
of such technological protection measures, if the Governor in Council
considers that the application of that section to the technological
protection measure or class of technological protection measures
would unduly restrict competition in the aftermarket sector in
which the technological protection measure is used.

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Regulations to deal with unintended
consequences
¬ 41.21 (2) The Governor in Council may make regulations
¬ (a) prescribing additional circumstances in which paragraph 41.1(1)(a) does not apply,
having regard to the following factors:
¬ (i) whether not being permitted to circumvent a technological protection measure that is
subject to that paragraph could adversely affect the use a person may make of a work, a
performer’s performance fixed in a sound recording or a sound recording when that use is
authorized,
¬ (ii) whether the work, the performer’s performance fixed in a sound recording or the sound
recording is commercially available,
¬ (iii) whether not being permitted to circumvent a technological protection measure that is
subject to that paragraph could adversely affect criticism, review, news reporting,
commentary, parody, satire, teaching, scholarship or research that could be made or
done in respect of the work, the performer’s performance fixed in a sound recording or the
sound recording,
¬ (iv) whether being permitted to circumvent a technological protection measure that is subject
to that paragraph could adversely affect the market for the work, the performer’s
performance fixed in a sound recording or the sound recording or its market value,
¬ (v) whether the work, the performer’s performance fixed in a sound recording or the sound
recording is commercially available in a medium and in a quality that is appropriate for
non-profit archival, preservation or educational uses, and
¬ (vi) any other relevant factor; and
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Regulations to deal with unintended
consequences
¬ 41.21(2)(b) requiring the owner of the copyright in a work, a
performer’s performance fixed in a sound recording or a sound
recording that is protected by a technological protection measure
to provide access to the work, performer’s performance fixed in
a sound recording or sound recording to persons who are
entitled to the benefit of any of the limitations on the
application of paragraph 41.1(1)(a) prescribed under
paragraph (a). The regulations may prescribe the manner in
which, and the time within which, access is to be provided, as
well as any conditions that the owner of the copyright is to
comply with.

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Comparison of the flexibility of C-32’s TPM provisions with
those in other countries to deal with unintended consequences
and technological changes
Regulations to
Process to exclude Process to ensure exclude classes
new classes of individuals can avail of TPMs where
Country Mandated review
TPMs or classes of themselves of the permitted there they would
works exceptions unduly restrict
competition

Tri-annual review
process before
United Copyright Office to § 1201(a)(1)(D)
N/A N/A
States exclude classes of
works for certain
purposes
Article 6(4) Member States
must take appropriate
EU measures to ensure
Copyright N/A beneficiaries of an exception N/A N/A
Directive can avail themselves of the
enumerated exceptions to the
TPM provisions.

s.41.21(2)(a) Regulations can

s.41.21(2)(a)
be made at any time to require
Regulations can be
rights holders to provide s.41.21(1)
made any time with
Canada access to a work to enable Regulations can be s.92 every 5 years
broad flexible criteria
individuals avail themselves of made any time.
to exclude new
the enumerated exceptions to
classes of TPMs.
the TPM provisions. 11
Can the WIPO Treaties be implemented by
limiting protection to circumvention for the
purposes of infringement?

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The WIPO Treaties do not permit the type of
framework provided for in previous Bill C-60

“A plain reading of Articles 11 and 18 of the WIPO Internet Treaties,

the definition of “technological measure” and new section 34.02 [of Bill
C-60] inevitably raise questions about the adequacy of the protection
for technological measures to enable Canada to ratify the WIPO
Treaties. In fact, in view of persuasive commentary including in
particular the WIPO Guide and legislative developments among
Canada’s trading partners, the inevitable conclusion is that
Canada’s legislation could not adequately implement its
obligations regarding technological measures under the WIPO
Internet Treaties without significant amendment to the definition
and new section 34.02.” Glen Bloom, Technological Measures and
Rights Management Information, October 25, 2005

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The WIPO Treaties cannot be implemented by limiting
protection to circumvention for the purposes of infringement
¬ “It seems that the vehemently debated issues in connection with the TPM
provisions of Bill C-32 are the questions of (i) whether it is a treaty
obligation to protect both access-control and copy-control TPMs; (ii)
whether it is a treaty obligation to prohibit so-called “preparatory acts” (the
manufacture and distribution of “protection-defeating devices,” etc.); and
(iii) whether circumvention should only be prohibited when it is linked to
infringement. Canada’s major trading partners have answered affirmatively
the first two questions and negatively the third one. I submit, along with
authoritative commentators, that – in view of the treaty provisions and their
negotiation history – these are the correct answers.”
¬ Dr. Ficsor, “TPMs AND FLEXIBILITY (“THE ABILITY OF BENDING
WITHOUT BREAKING”) – WHY SHOULD THE TPM PROVISIONS OF
BILL C-32 PROTECT ACCESS CONTROLS AND PROHIBIT
“PREPARATORY ACTS,
http://www.iposgoode.ca/Ficsor-TPMs-and-Flexibility.pdf

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The WIPO Treaties cannot be implemented by limiting
protection to circumvention for the purposes of
infringement
“Prof. Geist insists on flexible interpretation and implementation
of the TPM provisions, and alleges that those who do not agree
with him – such as me – are the advocates of inflexible
interpretation and implementation. The truth is that everybody –
including myself, as I have clearly stated – is of the view that the
TPM provisions offer flexibility. The difference between us is only
that, while Prof. Geist – as he quite clearly states – is in favor of
an unlimited flexibility, myself and others are of the view that the
requirement of adequate protection sets limits in this respect.”
Dr. Ficsor, TPMs AND FLEXIBILITY

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The WIPO Treaties cannot be implemented by limiting
protection to circumvention for the purposes of
infringement
“The “subsequent practice” of countries party to the two Treaties
implementing the TPM provisions indicates that Canada’s major
trading partners have duly implemented the treaty obligations as
outlined above…Prof. Geist suggests the contrary. His examples
covering certain developing and “transition” countries and countries
which have not acceded yet to the Treaties, along with extremely few
isolated other cases, are not suitable to justify his position.” Dr.
Ficsor, TPMs AND FLEXIBILITY
¬New Zealand has not ratified the WIPO Treaties.
¬“It does happen time and again that certain Contracting Parties do
not fulfill their treaty obligations. In this respect, Switzerland is such
a country.” Dr. Ficsor, TPMs AND FLEXIBILITY

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Should circumvention of TPMs for private
copying purposes be permitted?

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Each Exception is Limited To Where an Individual Doesn’t
Circumvent a TPM: Why This is Necessary

¬ The exceptions for format shifting (s.29.22), time shifting (s.29.23) and
backup copies (s.29.24) are all subject to the condition that the individual
does not circumvent a TPM in order to make the copy.
¬ TPMs (and TPM protection) ultimately benefits both consumers, creators
and distributors of digital content since they enable the creation of a
diversified market for digital goods.
¬ Allowing individuals to circumvent these TPMs for personal uses
undermines the viability of these markets.
¬ Innovative distribution models for digital goods require the protections
placed on media or content to be enforced in order to be effective.
¬ Ad-supported on-demand business models are ineffective if individuals can
make new copies.
¬ These conditions against TPM circumvention are even more essential
where the copying would go uncompensated, e.g. where there is no levy.

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Why the TPM Restrictions in the Exceptions
Are Necessary
¬ “Rent” option allows the customer to
download a movie file with a TPM
that causes the file to automatically
delete itself at the expiration of rental
period (e.g. a week).
¬ If consumers are allowed to
circumvent TPMs in order to format
shift copies, the “Buy” option is
completely ineffective since
consumers could create copies of
“rented” files without the TPMs that
cause the file to be deleted.

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Why the TPM Restrictions in the
Exceptions Are Necessary+
¬ Past 2-3 years has seen substantial
growth in distributors making content
available online using ad-supported
audio/video streaming model (Hulu,
Spotify, etc.).
¬ Streaming technology that requires user
to view advertisement is a form of
access-control TPM.
¬ Distribution model is rendered ineffective
if end-users can legally create TPM-free
format-shifted or time-shifted copies.
¬ New innovative distribution models of
digital media are dependent upon robust
TPM protections.

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Why the TPM Restrictions in the Exceptions
Are Necessary
¬ Music
Digital Distributors End-user

iTunes TPM- Market for paid

free song: $.99 music undermined

Circumvent TPM put

song on iPod
(format-shifting or
time shifting)

Streaming music
from Spotify,
YouTube: free (ad-
supported, TPM
prevents local Consumer goes to
download) streaming website

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Why the TPM Restrictions in the Exceptions
Are Necessary
¬ Software/Games
Digital Distributors End-user

Market for non-trial

TPM-free: $50 version of software
undermined

TPM allowing
program installed on Circumvent TPM
only 5 computers: under format shift
$20 exception

5-day trial version

(TPM deletes
program after 5
days): free Consumer
downloads free trial

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Are private copying exceptions “user rights”
that trump legal protection for TPMs?
¬ “User rights” under copyright do not transfer the copyright in a work to the buyer of a
work. There may be ownership or a right to use the copy, but not transfer of the
copyright.
¬ The creation of an exception for private copying does not as a matter of law create any
“user right” that trumps “authors rights”.
¬ “…private copying does not constitute a right but a legal exception to the principle
prohibiting any integral or partial reproduction of a protected work without the consent of
the holder of the copyright” The Mulholland Drive case, France Cour de Cassation, 19
juin 2008.
¬ UFC-Que Choisir v Perquin, Paris, Court of Appeal, 4 April, 2007, “private copying may
be raised as a defence in proceedings - especially proceedings for copyright
infringement - but it cannot be claimed as constituting a right on which to found a
principal claim having regard to the “no right, no action” precept, regardless of the
existence of a private copying levy paid by consumers;”
¬ Test Achats v EMI Recorded Music Belgium et al Brussels Court of Appeal, September
9, 2005 (dismissing claim that use of TPMs on CDs infringe individual’s “rights” under
the private copying exception).

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Do other jurisdictions permit an exception for
private copying to trump TPMs?
¬ EU Copyright Directive (2001/29/EC of the European Parliament and of the
Council of 22 May 2001):
¬ private copying is only permitted if it is subject to fair compensation,
e.g. a levy, Art 5.2(b)
¬ a private copying exception must not violate the Berne Three Step
Test, Art. 5(5)
¬ there is no exception that permits circumvention of TPMs to enable
private copying, Art 6(4)
¬ Member States may take measures to enable certain private copying
where a rightsholder has not voluntarily done so, without preventing
rightsholders from limiting the number of copies, Art. 6(4); this provision
has never been used
¬ Member States cannot take measures to enable private copying for
“works or other subject-matter made available to the public on agreed
contractual terms in such a way that members of the public may
access them from a place and at a time individually chosen by them.”

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Would an exception for private copying that permits circumventing
TPMs violate the Berne Three Step Test?
¬ Mulholland Drive, France Supreme Court, 28 February 2006: An exception for private
copying that prevents copyright holders from using TPMs to prevent that copying in the
digital environment would violate the Berne Three Step Test:
¬ “Whereas, according to Article 9.2 of the Berne Convention, the reproduction of literary
and artistic works protected by copyright can be permitted, in certain special cases,
provided that such reproduction does not conflict with a normal exploitation of the work
nor cause an unreasonable prejudice to the legitimate interests of the author; that the
private copy exception provided for in Articles L. 122-5 and L. 211-3 of the Intellectual
Property Code, which must be interpreted in the light of the European Directive cited
above, cannot form an obstacle to the insertion in the carriers onto which a protected
work is reproduced, of technical protection measures intended to prevent the copying of
[that work], when it would result in a conflict with the normal exploitation of the work,
which must be assessed by taking into account the economic impact that such a copying
can have in the context of the digital environment…
¬ That in ruling as it did, whereas the conflict with the normal exploitation of the work, which
should lead to the setting aside of the private copying exception, must be assessed in
light of the risks inherent in the new digital environment as regards the safeguarding of
copyright and of the economic importance that the exploitation of the work, in the form of
DVD, represents for the recovery of the costs of cinematographic production, the Court of
Appeal violated the legislative texts cited above;”

25
Would an exception for private copying that permits circumventing
TPMs violate the Berne Three Step Test?
¬ Henry et al v SA Warner Bros France Paris Commercial Court, 19
September 2007:
¬ “In the absence of anti-copying devices, any individual with a DVD
and access to a player/recorder can make an unlimited number of
copies completely identical to the original. By providing copies
made in this way, even free of charge, to third parties, these
individuals are liable to disturb the DVD market and as a result
lower the incomes of producers in an uncontrolled manner.
¬ The court considers this risk to be sufficiently serous and
established to justify in law the presence of anti-copying devices
preventing identical reproduction.”

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Can the WIPO Treaties be complied with by permitting
circumvention of TPMs for private copying?
“an adequate, rather than more than sufficient, level of protection requires
appropriate norms to guarantee the applicability of exceptions to copyright
justified by relevant public interests; this, however, requires cautious regulation
duly balancing between the various interests and it cannot take the form of
simply providing direct free access for any beneficiaries of any exceptions in
any possible format by eliminating the applicability of any kind of TPM –
contrary to Prof. Geist’s allegation according to which the purpose of the
application and protection of TPMs, and through it, the adequate protection and
normal exploitation of copyright, could be achieved also by allowing the
circumvention of TPMs for anybody in order to directly enjoy any
exception (for example, a “private copy” exception by each member of the
huge Internet population, and in fact anybody who wants at all a copy) or to
get access to works otherwise (for example, in order to receive freely any online
communication of works citing the fact that such acts are not directly controlled
by copyright).” Dr. Ficsor, TPMs AND FLEXIBILITY
How can protection for TPMs be “adequate” if a right of circumvention for
private copying would violate the Berne Three Step Test?

27
Does Canada have any trading partners that have private copying,
no levy, and permit circumventing a TPM for private copying?

¬ No country (including Switzerland or New

Zealand) permit circumvention of a TPM for
private copying without compensation, e.g.
without a levy.
¬ A solution that permits circumventing TPMs for
private copying would exacerbate the existing
problem of uncompensated private copying.

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