EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, November 19, 1996

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[Translation]

The Chairman: Order please. I'm calling this meeting to order for the consideration of Bill C-32, an act to amend the Copyright Act.

[English]

I declare the meeting open for a study of Bill C-32, amendments to the Copyright Act.

[Translation]

Today, we are pleased to welcome

[English]

the Canadian Copyright Licensing Agency, CANCOPY.

[Translation]

The representatives of CANCOPY are

[English]

Mr. Andrew Martin, executive director; Mrs. Lucy White, associate director; and Mrs. Marian Hebb, counsel. Mr. Martin, the floor is yours.

Mr. Andrew Martin (Executive Director, Canadian Copyright Licensing Agency): Good morning. I'm Andrew Martin, the executive director of CANCOPY, the Canadian Copyright Licensing Agency. Thank you for inviting us to appear before your committee. Rumour has it that our name has cropped up occasionally during these hearings, and we do appreciate the chance to meet with you and share our views on Bill C-32.

We are dividing our presentation into three parts this morning. Lucy White, who is CANCOPY's associate director, will explain who we are, what we do, and why this is relevant to Bill C-32. I'll then address the proposed exceptions that cause us the greatest concern. Finally, our legal counsel, Marian Hebb, who has also appeared before this committee, will discuss remedies and some of the administrative aspects of the bill.

After that we'll obviously be delighted to answer any questions and to provide you with any additional information that you need. In that regard, we've already given your clerk some material to hand out, which gives a bit more background on CANCOPY. You also have a copy of our annual report, our newsletters, and some of the material we provide to licensees, particularly our teacher licensees.

Lucy.

Ms Lucy White (Associate Director, Canadian Copyright Licensing Agency): Good morning. The Canadian Copyright Licensing Agency, better known as CANCOPY, was founded in 1988 by Canada's national writing and publishing associations. Our mandate is to offer affordable legal access to print copyright works through reproduction and to provide appropriate compensation to copyright holders when their works are reproduced.

We have been successful in our mandate. CANCOPY currently represents, by direct mandate, 3,000 Canadian creators and 242 Canadian publishers. This represents over 90% of the publishing activity in Canada. CANCOPY has also made 13 agreements with similar collectives in other jurisdictions so that we can extend the benefit of our licences to include the publications of American, British, French, German, and other rights holders. We estimate that, through direct and indirect mandates from copyright holders, we are able to offer a repertoire of approximately2 million publications to our licensees.

CANCOPY's structure is, I believe, unique and so bears mentioning here. Our voting members consist of all of the national and many of the provincial associations representing all genres of published works - novelists, poets, playwrights, freelance writers, scholarly writers, and publishers of books, magazines, newspapers, and music.

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In all, we have 30 voting members who elect our board of directors. The board consists of18 directors, half creators and half publishers. This parity extends to each of our committees. We are confident that this structure encourages ongoing debate on the issues confronting us and gives CANCOPY the credibility with all of our constituent groups that is critical for a successful collective.

Now let me turn briefly to our licensing program. Our licensees include: the Government of Canada; the Ontario and Alberta provincial governments; ministries of education outside Quebec, representing 88% of kindergarten to grade 12 pupils, with agreements for the other 12% pending; all universities and colleges; and a growing number of corporations and non-profit organizations. We are close to finalizing a licensing scheme for public libraries, and we intend this spring, with the support of the major legal publishers, to design a suitable scheme for the legal profession.

I'd like to spend a minute now talking about our financial picture. As detailed in our annual report, CANCOPY collected over $12.7 million last year. Our projected revenues for this year are approximately $14 million. CANCOPY's overhead costs are currently 17.5% of licensing revenues, and this figure will continue to climb, as it has each year since 1991. Comparatively CANCOPY fares very well, as our counterparts overseas require between 20% and 25% of revenues for administration.

The balance of the royalties are, of course, distributed to writers and publishers. In the last12 months, we have distributed over $7 million, 76% of which went directly to Canadian writers and publishers. We have been criticized for being slow to distribute these royalties, and I have to acknowledge that it has been difficult for our rights holders to wait while the policies, systems, and data required for distribution were put in place. However, as of October 10, 1996, we have distributed 94% of royalties collected before 1994-95. Distribution of royalties collected in 1995-96 is currently under way.

In addition to our core activities of licensing and distribution, we invest heavily in communications, working with our licensees to explain the terms of the licences, as well as to answer general copyright awareness questions. We try to be open and transparent in our dealings with members, affiliates, and licensees. We maintain a home page on the Internet that will shortly include our latest annual report and financial statement. Many of the other submissions to the committee have included information promptly and willingly supplied by us.

In short, we're the agents of choice of the overwhelming majority of Canadian print copyright owners. With this support we are able to offer efficient, flexible, and sensibly priced licensing services to users of copyright materials.

We work closely with our counterparts at UNEQ, the Quebec collective, and are constantly exploring ways of assisting our stakeholders and customers.

In general, we support the aims of Bill C-32 as they apply to reprographic reproduction and collective societies, but we have some difficulty with some of the proposed provisions. Andrew Martin will now outline these concerns and suggest solutions that we hope you will find acceptable.

Thank you.

Mr. Martin: In the eight years since the so-called phase two amendments were promised, photocopying has become so entrenched in our education and library systems that you're now being repeatedly told that it's essential. But CANCOPY and our counterpart, UNEQ, run licensing schemes that easily and inexpensively meet the needs of teachers, students, and library users.

You've been told by other witnesses that the current law cuts kids off at the knees, that teachers live in fear when they make photocopies, that school board budgets are eaten up by legal fees to negotiate licences, and that the cost of licensing is prohibitive. We strongly believe that none of this is true.

What is true, though, is that some of what's in Bill C-32 will undermine existing licensing agreements. We don't think this is fair, and we don't think it's what was intended either. We do support Bill C-32, but we would prefer to see exceptions only if collective society licences aren't available. In other words, license it or lose it.

However, because we realize you may not wish to take that route, I want to propose today certain small changes that we feel should be acceptable to all copyright stakeholders.

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Bill C-32 as currently drafted will allow multiple copying by libraries. Our strong position is that this is not a power that libraries need, and frankly it isn't one they have in other countries except through licence.

CANCOPY licenses multiple copying, and we've already been told by legal counsel for the universities, for example, that because of Bill C-32 it's quite possible that this part of the university licensing agreements may not be needed in future. Representatives of schools have said much the same thing. To prevent this dislocation of the current market from happening, we're asking you to make the changes we propose in our brief to address that particular situation.

Second, there is in Bill C-32 what is effectively a 12-month embargo on library copying of newspapers and magazines. We have to assume that the purpose of this is to protect the market for new publications. If that is the case, we ask you to extend that embargo to all periodicals for12 months after publication and not to limit it to newspapers and magazines.

Third, I need to turn to interlibrary loan. You have been told by other witnesses that this accounts for a tiny percentage of library copying, maybe only 2%, but I think you need to see this in a wider perspective. That 2% translates to some 300,000 articles a year just within university research libraries. If you include other non-profit libraries, the figure is substantially higher, and if you include the interlibrary loan operated by CISTI, the Canadian Institute for Scientific and Technical Information, that figure at least doubles.

There are then four points that I think I need to make about ILL today. The first is that CANCOPY licenses interlibrary loans, so this exception is obviously going to affect our licences. Indeed, that will start with the Government of Canada's licence. Treasury Board officials have already told us that they want a reduction in the licence fee paid by the government if Bill C-32 is enacted.

The second point is that if interlibrary loan is so important to academic libraries, we ask you to limit the exception so that it will only apply if the work they need is not in our repertoire. In other words, if we can license it, we believe we should have the chance to do so.

In fact, CISTI already has a licence structured along those lines for some of its export document delivery. It has this in order to comply with foreign copyright law. They tell us this is an easily administered licence, and we believe that if it works for them it can easily work for other libraries which have similar technology.

Our third point around ILL is that if you feel you have to keep this exception in its current form, then at the very least we ask you to impose some of the restrictions you find in the United States, for example, where there are guidelines on the number of times libraries can utilize ILL under their copyright law so that it really cannot become a substitute for purchasing subscription material.

Finally, we believe there must be no definition of reprographic reproduction in Bill C-32 that will permit anything other than photocopying. We strongly oppose any definition that allows the use of digital technologies like Ariel and indeed any exceptions for photocopying that might be interpreted as extending to electronic transmission.

My fourth general point concerns document delivery. Bill C-32 will allow non-profit libraries to run commercial document delivery services for corporations and professional firms. We seriously question whether this is a proper role for non-profit libraries. Part of our concern is that many publishers and private document deliverers offer just-in-time fax or e-mail delivery services and they should not be undercut by non-profit libraries sheltered by a statutory exception and not paying copyright fees to authors or publishers.

My fifth point is that Bill C-32 will protect libraries and educational institutions from liability for copyright infringement on their self-serve copiers. You've been told that without this immunity these institutions will be forced to remove unmonitored photocopiers. Frankly, this is hard to believe because the photocopiers are there now.

In some libraries - Metro Reference is a good example - you find high-speed copiers with automatic book page turning equipment. If legal liability really is a concern, why then are libraries installing machines that clearly are custom-made to infringe copyright? We believe there has to be some responsibility for the equipment that's installed.

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While we are strongly opposed to this provision as drafted, we have in our brief outlined a solution that we can accept by making immunity for unauthorized use conditional on the provider of the equipment having a collective society licence. We think that approach is also consistent with other parts of Bill C-32, where certain immunities are given to licensees of collective societies.

Finally, we share the concern already expressed by several publisher and creator groups and by UNEQ over the inclusion of assignments in Bill C-32, specifically in proposed section 29.4. This provision is surely directed to tests and examinations. These are part of the assessment process.

Assignments, on the other hand, are part of the teaching process, which is the very thing that, among other things, CANCOPY exists to license. The current drafting is an invitation to abuse or, at the very least, to confusion and controversy, and we ask you to amend it.

That concludes our submission on the proposed exceptions. Marian Hebb, who is CANCOPY's legal counsel, will now outline our position on some of the proposed remedies and administrative provisions of Bill C-32.

Ms Marian Hebb (Counsel, Canadian Copyright Licensing Agency)): Good morning.

Bill C-32 introduces improvements to the remedies in the Copyright Act intended to assist with enforcement. But unfortunately, because of the way CANCOPY derives its authority from its rights holders, these improved remedies may not be available to us.

CANCOPY's rights are generally non-exclusive. This means that our members still can, if they wish, control some of the rights in question themselves. Of course, it also means that we are not a monopoly. As a result, one provision that is not available is the statutory damages remedy, which is specifically designed to assist collectives. We ask you to make an appropriate amendment to this so that we can take advantage of it as well.

We also ask you to amend the ceiling of damages, which is set at ten times an applicable royalty. Since CANCOPY sets its royalties in terms of pennies, ten times is not really a very effective remedy. We ask that you at least give the court discretion to increase a damage award in appropriate circumstances.

Another new remedy is the wide injunction, which includes works that have not yet been infringed. This remedy will be of particular value to collective societies in dealing with persistent infringers. Again, because of the way we hold our mandate, it's not available to us, so we ask that you make the change we have proposed in our brief.

Perhaps most importantly, there is nothing in Bill C-32 that gives a collective society without an exclusive mandate from its rights holders the right to sue, unless the society adds all of the affected copyright owners as plaintiffs. To do this where a very large number of works have been infringed is impracticable and sometimes impossible, especially with the foreign rights holders. This is not what our rights holders expect from us, and we ask that you make amendments that will enable us to accommodate them.

We and our rights holders are also concerned that copies made for a purpose that is permitted by an exception will be used for a purpose that is not covered by an exception. For example, copies that have been made for an examination or test under an exception must not subsequently be used for classroom teaching. To prevent this or any other improper uses, we have proposed a small amendment or else a change to the definition of infringing.

I'd like to conclude with two endorsements of positions that have been advanced to you by others who have appeared before this committee. The first concerns the provision in Bill C-32 that puts a ceiling on damages that can be recovered for infringement from an educational institution that has a licence with a collective society. CANCOPY supports the extension of this limited damages provision to other licensed institutions, such as libraries, archives, and museums, especially as we are now probably within a few weeks of concluding a national licensing scheme for libraries.

Finally, I want to respond to the proposal made by the Copyright Board that collective societies should administer the licences now granted by the board when the copyright owners are unlocatable. CANCOPY sees this as an appropriate responsibility, which it is willing to assume. We therefore support this proposal of the Copyright Board.

Thank you very much.

The Chairman: Thank you, Ms Hebb.

Are you ready for questions, Mr. Martin?

Mr. Martin: Yes.

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[Translation]

The Chairman: Mr. Leroux.

Mr. Leroux (Richmond - Wolfe): I would like to thank you for your contribution to the work of this committee.

First of all, I would like to broach the issue of your own existence as a bargaining agency representing rights' holders.

According to some organizations and management collectives that came here the current bill could call into question certain agreements that have already been signed. They even referred to CANCOPY among the possible casualties of the bill, namely that it could call into question or nullify certain agreements and question the recognition of negotiations, which could make negotiations more difficult in the future.

I would like you to tell me whether the bill, as tabled, with all the exceptions it contains, leads you to believe that CANCOPY has a future as a representative of rights' holders, with a capacity to negotiate and enforce agreements. I ask this because you have just mentioned that you are negotiating with libraries and that a national agreement may be possible. Will the bill make your practice and your existence more difficult?

[English]

Mr. Martin: In some respects I think it will make things more difficult. I believe many of the exceptions are going to be impossible to interpret correctly and I think several others are going to be impossible to administer.

I was at a meeting yesterday with representatives of the public libraries. I believe one of the people who was there from the libraries is actually here today, so will perhaps throw something at me if I'm wrong. We agreed that expecting librarians or users of libraries to make some of the very delicate distinctions set out in the exceptions is simply not going to be feasible. The basis of our proposed licensing scheme for libraries is that in a sense we do it from a top down rather than a bottom up approach. In other words, you cannot make the determination with each and every photocopy of whether it is or is not covered by an exception.

Overall, I think the exceptions will not clarify the position as far as negotiations are concerned. There will be endless arguments over what is or is not covered by exceptions. There are elements of some of our licences that clearly are going to be affected by Bill C-32. I cannot estimate at the moment exactly what that impact will be, but I alluded to two examples.

One example is the view, canvassed on behalf of universities, that a key part of their licensing scheme, which currently generates approximately 45% of the revenue we receive from universities, may not be required in the aftermath of Bill C-32 because of the interlibrary loan exception and because of the possibility that some of the multiple copying can be done by libraries. At the moment we don't know how that will translate at the negotiating level, but clearly they wouldn't have flagged it if they didn't think there was some merit in their argument.

The other licence we've been told will be affected is our agreement with the Government of Canada, a major component of which deals with copying by government libraries. We've been told that when these agreements are renegotiated next April, they will be looking for a major reduction in the licensing fee as a result.

Clearly it is going to be influential in future negotiations. I don't want to mislead you by giving you apocalyptic estimates of the impact on revenue. I think it is possible that it would nudge into the millions rather than the hundreds of thousands. I don't think it will undermine the licensing schemes, but I do not believe Bill C-32 will bring clarity to troubled copyright waters. I think seeking to introduce a balance will actually take away from our rights holders money that they are currently receiving.

I hope that answers your question.

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[Translation]

Mr. Leroux: Thank you, Mr. Martin. You have now a solid experience of negotiations having negotiated agreements and used arbitration mechanisms for quite some time. Therefore, you table your tariffs and anyone has the right to challenge them before the Board.

Under the current system, you grant licenses. Do you recognize exceptions in the licenses that you grant and are the mechanisms currently in place satisfactory to you in terms of negotiation and capacity? You have a recognized right to grant licenses, but since the legislation has provided for exceptions, I would like to know whether you also grant exceptions.

[English]

Mr. Martin: We find that it is entirely possible to negotiate mutually acceptable licensing schemes without any of the exceptions contained in Bill C-32. To the extent that some of the proposed exceptions have been raised in negotiations, we have generally agreed to differ on whether exceptions or fair dealing apply, and to come up with a solution really through the tariff that both parties can live with.

We have found that in some sectors the advent of Bill C-32 has been used by prospective licensees as a reason to delay entering into negotiations for licensing agreements. We found this particularly with the corporate libraries, which have strongly believed all along that there would be a library exception that would cover for-profit as well as non-profit libraries.

As a sector, most of the special librarians have been advised by their association not to talk to us at all. That has relaxed very slightly in the last few months, as it became increasingly obvious that Bill C-32 probably - and properly - would draw a distinction between non-profit libraries and those whose libraries are basically intended to serve a commercial objective.

[Translation]

Mr. Leroux: Let's consider a specific exception. The bill states, for example, that educational institutions will not be responsible for copyright violation on its self-serve photocopiers or reprographic equipment, etc. To your mind, does that imply that the staff of that educational institution could make self-serve photocopies and be exempted?

Do you think the bill could include all those people and that, in the final analysis, no one would be responsible for copyright violation? Members of that institution would simply notify everyone and people would take advantage of this. What are your thoughts on this?

[English]

Mr. Martin: Well, we feel it totally unacceptable, and it's allowing educational institutions, if they choose to, to walk away from their copyright responsibilities. I want to qualify that, because I don't think the majority of institutions do take an irresponsible approach to copyright; that's not been our experience.

I think that with an exception that absolves the institution simply if it puts up notices by photocopiers, we would have serious problems with it, because it could lead to an institution effectively sanctioning what it knew to be unauthorized copying.

I guess we feel doubly irritated by it because photocopying machines are generally profit centres; people who install them do not lose money on it. If you go up to a self-serve copier in a college, university or library, it will cost you between 10¢ and 20¢ to use it. Probably about one-third of that money goes to the supplier of the equipment. So we feel it's inappropriate for people to install equipment. They know perfectly well it's going to be used to infringe copyright and to make money off the back of it.

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What we do feel, and what we propose in our submission, is that this would be an appropriate exception. In other words, immunity from liability for self-serve copiers would be an appropriate exception if the institution itself had a collective society licence. We think that's consistent with how Bill C-32 has dealt with certain aspects of statutory and limited damages. In other words, those protections are linked to having a licensing scheme in place.

We also think that in the way we propose it, it gives an appropriate protection against unauthorized, unlicensed photocopying.

So we could live with this exception if it was tied to the institution itself having a collective society licence.

Mr. Abbott (Kootenay East): I'm just looking at the distribution of funds collected by CANCOPY, and I note that there was a distribution of over $1.4 million to the U.S. Is there an equivalent or greater income from the U.S., or does CANCOPY in fact get any money from U.S. users of copyright, and is that distributed to Canadian authors and publishers?

Ms White: We do receive a great deal of revenue from the U.S. We have a bilateral agreement with our counterparts there. I don't know the exact revenue figure off the top of my head; it's about $200,000.

So there is a difference between the amount we collect from the U.S. and the amount we distribute. However, that's probably proportionate to the amount of U.S. material used in schools and universities. According to the terms of our bilateral agreement, the Berne Convention, and other conventions, we adhere to national treatment, and that's an appropriate response to the copying data we receive.

Mr. Martin: The other small point there is that our counterpart in the United States is primarily involved in licensing the corporate sector. It has only recently started licensing education and government. So for the next few years there is going to be a mismatch in sources of income. And we would expect - and indeed we are seeing - quite exponential increases in the amounts of money we are receiving from our bilateral partners.

Mr. Abbott: Now, earlier in our testimony we received testimony from Laurier Office-Mart. I wonder if you could tell the committee why you chose to enforce your copyright against the university shop, using criminal charges, instead of suing them for copyright infringement?

Mr. Martin: We didn't, Mr. Abbott; the RCMP chose to raid Laurier Office-Mart. If you read the submission on behalf of that witness, at some point the chronology does actually identify that as being the case. I believe a group of RCMP officers were taking courses at the University of Ottawa, and noticed that copyright authorization had not been obtained for the materials handed out.

In a moment I'm going to ask Lucy White to deal with some of what actually happened, because she was CANCOPY's witness, and she was mentioned a couple of weeks ago.

But it's true to say that we were somewhat taken aback and embarrassed by it. The secretary of the University of Ottawa was a key member of the AUCC negotiating team, with which we were hoping to conclude a model agreement for Canada's universities.

So we find any suggestion that legal action was being taken in a way that could affect one of those negotiators awkward and embarrassing. We did not initiate, and did not feel at all comfortable at any stage with, those proceedings.

Mr. Abbott: Well, that being the case, would you agree that perhaps the criminal provisions proposed in Bill C-32, the continued criminal provisions under copyright law, perhaps are unnecessarily onerous, that in fact we should be looking to other means of enforcement, other than criminal ones?

Mr. Martin: I have mixed views on that, you see, because for our part we would not generally see criminal sanctions as an appropriate way of dealing with copyright infringement. But it doesn't follow that it's never appropriate.

If I steal a loaf of bread from Loblaws, I have still committed theft under the Criminal Code. Whether I should be taken to court is a matter of prosecutorial discretion. I know that at the moment the justice department is reviewing its guidelines on that for crown attorneys and RCMP detachments.

So I think there are cases where you can clearly say that what happened was excessive in relation to what was done, but I'm loath to go so far as to say that even when quite small amounts of money are involved, copyright infringement should never be the basis of a criminal charge.

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Mr. Abbott: In the documents provided by Laurier, CANCOPY drew to the attention of a potential Laurier customer the fact that the copyright fee was lower at the university, thereby encouraging the customer not to use a commercial service. Do you think that's really a fair practice on the part of CANCOPY?

Mr. Martin: No; I think it's an incorrect characterization of what happened, though. When we negotiated our agreements with the universities - and we're now going back to discussions that took close to five years - the universities took the unshakeable position that for a number of reasons, the fees paid by them should be lower than the fees paid by commercial, for-profit businesses.

At the time, we thought there were very compelling reasons that the position the universities were taking was correct. They made the argument on where the material was produced, how it was used, and the fact that universities were publicly funded and non-profit institutions, whereas privately owned copy shops were basically for-profit businesses. They also pointed out how licensing agreements with copy shops did not restrict them to educational material, that they can copy for law firms and corporations. We ended up with a fee structure that, you're correct in saying, charges less to universities than to copy shops.

Now, a number of things have happened that are making us revisit this particular turn of events. The first is that as we look at what the copy shops are actually doing and reporting to us, we find that the overwhelming majority of what they do is in fact educational material for educational users. I don't want to start quoting bits out of our file with Laurier Office-Mart; it's not appropriate. But it seems to us that somewhere between 95% and 97% of what they do probably is educational material.

So I think it's a fair point: should there be a differential tariff for two people doing fundamentally the same thing for the same people? We're not persuaded.

Now, we are doing two things about that. First, we are, in any event, actually proposing to increase the tariff paid by universities, because we feel it's way out of line with what the fee ought to be for the kinds of materials they're using. That may or may not be something we resolve in negotiations, or it may be something the Copyright Board determines.

If it does go to the Copyright Board, we will certainly ask the board to look at whether this differential tariff is a problem for them, because we have two licensees basically saying fundamentally contradictory things.

The other point that concerns us is whether there may be some merit in the argument that this is unfair and anti-competitive. We've already approached the Competition Bureau to ask if they have problems with our current pricing structure. If they do, then we will move to change it. We certainly don't want to prejudice a for-profit operator.

Mr. Abbott: In conclusion, we were told there are six copy shops around the university, but only two are licensed. That's part of what we're talking about here.

Mr. Martin: You were given incorrect information, though. There may be six copy shops in the vicinity of the University of Ottawa, but our files show that at least four of them - and possible five, depending on how you're drawing your geographic boundaries - are licensed.

Mr. Abbott: Thank you.

[Translation]

The Chairman: Mr. Bélanger.

Mr. Bélanger (Ottawa-Vanier): Mr. Chairman, Mr. Abbott has asked most of the questions I wanted to ask, but I would like to verify a few minor facts. I would like to review the issue of the price differential between the licence that CANCOPY signed with the university and the licences that it signs with private entrepreneurs.

Would you be prepared to acknowledge - and I don't know whether this is the case for the University of Ottawa - that there are many institutions where the reprography centre is in fact a profit centre for them?

[English]

Mr. Martin: I'm loath to say that it's a for-profit copy shop, because I think you get into endless argument about accounting standards. But certainly our sense of what goes on is that most universities expect at least to cover their costs, and possibly make a profitable contribution from what goes in for print services or the copying done at the bookstore.

The way we are coming at this is to see an increase in the fee paid by the university, and we believe that will eliminate most, and possibly all, the distinction between privately owned and university-administered services.

Mr. Bélanger: That's not the case now. Do you have licences with any institutions where indeed the photocopying services are profit centres for that non-profit institution?

Mr. Martin: I really couldn't answer the question, because we're not privy to that information.

Mr. Bélanger: Do you think you should be concerned about that?

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Mr. Martin: It has cropped up in our discussions with the universities over the tariff -

Mr. Bélanger: Not just universities.

Mr. Martin: Just libraries and things?

Mr. Bélanger: Institutions generally. I mean, I want to know if you're -

Mr. Martin: We're uneasy about the non-profit distinction. We read, for instance, that some universities are looking perhaps to either shed or move away from conventional non-profit status. We're not persuaded that whether someone is for profit or not for profit fundamentally should make a difference in how they're treated under the copyright law.

Mr. Bélanger: But you currently do make a difference for your licensing -

Mr. Martin: Yes, there is currently a distinction in the licences.

Mr. Bélanger: So the will of CANCOPY is to move away from that and treat all copying the same, whether they be copied by someone who says they're non-profit or for profit?

Mr. Martin: We think that ultimately it could be an unfair and anti-competitive distinction.

Mr. Bélanger: All right. Do you believe there should be a threshold that should be reached before criminal prosecutions can be started for copyright infringement?

Mr. Martin: No, we think it comes down to the discretion of the prosecutor and, indeed, judicial sentencing policy.

Mr. Bélanger: So as in the case of Laurier, whether or not this is a $300 or $32 infringement, in terms of the monetary value, you say there should be no threshold before which criminal prosecutions can be triggered? That might involve tens of thousands of dollars in costs to those, depending -

Mr. Martin: Yes, it may do so. As I said earlier, we don't see the criminal provisions of Bill C-32 as central to how we would approach enforcement. So I don't really want to take a position here that I know is not shared by other copyright owners and their collectives.

Mr. Bélanger: It's just that I've looked at the documentation you gave us this morning. This is from CopyRight, fall 1996: ``Publishers obtain copy shop judgments.'' You've mentioned two cases in which CANCOPY is a participant and presumably initiator -

Mr. Martin: No, we're not initiators.

Mr. Bélanger: Well, you're a participant.

Mr. Martin: We're witnesses at the request of the Crown.

Mr. Bélanger: Sorry. It says ``in John Wiley & Sons Canada Ltd. and CANCOPY v. Copywell Inc.'' This is your publication. And the second one is Copp Clark Longmans and CANCOPY v. Copie 2000. I mean, you're in there versus -

This is your publication, and you say ``CANCOPY continues to make compliance a priority, working to protect the rights of creators and publishers.'' What you're saying and what I'm reading here don't jibe. Would you care to explain that?

Ms White: Both these suits were civil cases brought by CANCOPY jointly with the copyright holder at the copyright holder's request. They're not criminal cases at all. Both involved a copy shop making copies of textbooks and selling them at prices much below the retail price.

Mr. Bélanger: All right. In terms of CANCOPY itself, then, and criminal prosecutions, is there a threshold within which you are not prepared to act, and if so, are you prepared to divulge that?

Ms White: Do we have - I'm sorry, I don't understand the question.

Mr. Bélanger: I'm getting at a point that is -

Ms White: Do we have a threshold for criminal?

Mr. Bélanger: Yes, an internal one.

Ms White: No, we don't.

Mr. Bélanger: Have you started any criminal prosecutions?

Ms White: No.

Mr. Martin: We don't prosecute.

Mr. Bélanger: Strictly on the civil side? Thank you very much.

The Chairman: Mr. O'Brien.

Mr. O'Brien (London-Middlesex): Thank you, Mr. Chairman. I'd like to focus for a minute on proposed section 29.4, the educational exception you address in your proposed amendments. First, in proposed subsection 29.4(1) you propose the so-called blackboard exception to handwriting. Can I ask you to elaborate on why you're focusing strictly on handwriting? What is the big concern you see there?

I think that if you were to wander into the average classroom in this city or this country, you'd find that perhaps unlike the old days - if you want to call it that - in education, the average teacher is not filling blackboards any more with these large written notes, etc., with every little bit of space available. There are other technologies available.

I'm wondering why there is this concern and the wish to limit this strictly to handwriting. This is your proposed amendment, the first one proposed on page 3 of your summary.

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Ms Hebb: I think that if one looks at this historically, in the past teachers have been able to write things on blackboards. Now people are getting very concerned that they can use other technologies in order to put things up for the class in a more organized sort of way. They can have slides and things that they just pull out of the drawer. In fact, it is a very organized way of copying.

There was a certain amount of effort involved initially in the handwriting exception, and we didn't actually feel there was a need for this as an exception; under the law it's considered de minimis. I mean, nobody really suffers any damages from a teacher writing something on a blackboard.

But now we understand that this particular provision could allow for a computer, for instance, to put material up in front of the class, or even show a film.

So this exception, which initially was really meant to codify a very narrow thing that required quite a bit of effort on the part of the teacher - and no one was really concerned about it - has become something that is in fact extremely broad.

Mr. Martin: We also think it has the potential to translate into digital delivery for distance education, and we don't think that's a proper matter to deal with in this particular exception.

Mr. O'Brien: Mr. Chairman, if I'm understanding the witnesses - The concern I have is that if you are literally talking about confining the teacher to handwriting on a blackboard, that ignores a number of very important things that take place in a classroom. First, you have a number of students with a wide variety of physical and intellectual disabilities. To restrict teachers to strictly writing on a board - The way I recall that, I don't think it's too common any more, I hope. To restrict them to that literally, if that's your intention, really makes it almost worthless for an educator in a modern classroom in this country today - Would you agree with that?

Mr. Martin: Yes, but not entirely with how you characterize some of it, Mr. O'Brien.

My wife is a teacher, and I asked her about a couple of these points. She agrees that by and large teachers do not get themselves covered in chalk these days trying to write on a board, and they may very well use overheads and other devices. I don't think we have a problem with what is done within the classroom, narrowly defined.

Our real concern about this has been the possibility that it could be interpreted as allowing digital transmission for distance education. We don't truthfully have any concern with how teachers communicate material within the classroom. Indeed, we license most of what they do within the classroom. If you look at the materials we handed around earlier, there are virtually no restrictions placed by the licence on how teachers communicate.

I'm speaking here as somebody who's married to one, and the father of a couple of students. Our licences do not restrict them. Our concern, the mischief we were trying to prevent, was the way in which material could be sent in digital format outside the classroom.

Mr. O'Brien: I appreciate that clarification.

Let's restrict ourselves to Ontario. Are the school boards in Ontario signing the agreements, or do most of them have agreements?

Mr. Martin: All of them agreed. The history of the licence in Ontario is complicated and not entirely satisfactory, because responsibility between the ministry and the boards has never really been entirely clear. I think much of what's going on at the moment in the Ministry of Education threatens to complicate, not simplify, it.

At the moment we effectively have a two-tier licence. Half of the cost is borne by the Ministry of Education. The other half is picked up directly by the school boards through supplementary agreements. The school trustee associations have been entirely supportive of this process. I believe I'm correct in saying that every school board in Ontario has a supplementary agreement with us.

Mr. O'Brien: Then I guess my question, Mr. Chairman, is why then do we need these amendments vis-à-vis education if you have agreements with all the school boards?

Mr. Martin: I guess that's where we came in. We'd be quite happy if you dropped all the exceptions from Bill C-32. We don't think they're necessary. We think that if there are exceptions, it should only be where a collective society is unable to provide a licensing agreement.

We're happy to talk about that in more detail, but our sense of what previous witnesses have said and what this committee has asked of other witnesses is that this is not a route you intend to go down. If you are, we can talk endlessly about it.

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The Chairman: I should mention that we've run out of time, but in view of the importance of your organization in relation to the bill I will permit a brief question to two people who have requested one: Monsieur Leroux and Mr. Peric.

In the interests of time, please make your questions brief and concise and I will ask the representatives of CANCOPY to do likewise.

[Translation]

Mr. Leroux: I got your message, Mr. Chairman.

I have a somewhat more specific question. You raised the issue of the repertoire and the difficulties that this legislation presents in terms of the objective of making the repertoire accessible. What are the difficulties that arise? You said that this is unenforceable and you're not the first to say so. What are the problems?

[English]

Mr. Martin: The difficulty really is one of scale. At the moment I have a printout on my desk provided by our American collective society partner of their repertoire for post-secondary institutions. It runs to 1,100 pages and has something like 45,000 items on it. We are in the process of adding Canadian, British and some other foreign material. I think we're looking at a document that will probably be 1,500 pages long.

Obviously it can be rendered into a machine-readable format. The problem we have - First of all, anyone who wants to know what is in our repertoire, we'll happily tell them. There are no secrets about this; there really are not.

The difficulty, I think, is an implementation problem. For some people, either going through disks or accessing on-line or through a 1,500-page directory is not feasible. I do not believe that for the 250,000 or 300,000 elementary and high school teachers this is how they want to operate. On the other hand, CISTI, which is a division of the National Research Council, does have a licence that is linked specifically to what is in our repertoire but they have the technology to enable them to access this material.

So it's not difficult to make the repertoire available, but at the practical level, at the implementation level, it's a completely futile exercise. People are not realistically going to go through what may be 60,000, 70,000 or 80,000 publisher and/or periodical entries in order to establish what is and is not within the repertoire.

The Chairman: Mr. Peric, briefly.

Mr. Peric (Cambridge): Thank you, Mr. Chairman.

Mr. Martin, according to your financial statement ending July 31, 1996, it seems to me there's some delay in distribution. Could you tell us what the problem is with that? According to the same statement, there's interest generated from the revenues. Can you explain to us if you share the interest with your members?

Mr. Martin: I'll answer the second question first. Yes, we do. We effectively distribute the interest by applying it to our administration costs so the percentage of licensing income we retain is reduced as a result. So we do not keep the interest; we're non-profit. It is relevant in this case because it's not our money, it's someone else's money. It's our members' money.

We don't distribute it to them as interest as such because the account and systems complexity would be a nightmare. It would also raise tax problems because we'd have to report the interest separately. So we take the interest into our overheads and that leaves a much smaller amount to charge off against licensing revenue. So yes, we distribute the interest.

Concerning the delay in distribution, there are two ways I want to answer this. The first is that we're not now convinced there is a delay. The lead time in most collective societies is anything from nine months to two years. We cannot, until the end of the year, know exactly how much money we have, because often we're not paid until several months after the end of the year. If you look at our financial statements, for instance, you'll see a receivable equal to about 20% or 22% of our annual revenue. Until that money is in, technically we don't have it even though we do actually accrue it to the royalty accounts as we go along.

On top of that, it may be several weeks after the end of a financial year that we get the bibliographic information we need in order to distribute. Then there are various processes we have to go through so we can distribute the money. Our policy is to get money out within 12 months of the end of the year in which it was collected. We think we did that last year. We're going to improve on it significantly this year and we will continue to work at it until the money goes out with minimal delay.

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The Chairman: Mr. Martin, can I ask you a brief question before we close?

Mr. Martin: Yes.

The Chairman: When the educational institutions appeared before us, I recall very clearly that at least one of them - there might have been two - told us how negotiations drag on and on, become extremely acrimonious, sometimes last into almost the total time of the licence, and by the time they're ready to renew, negotiations are still going on.

They were very surprised. They thought maybe the first time for the first licence there would be hard negotiations but after that they would be much smoother because they'd already negotiated the licence. Could you comment on that? Is it the reality that negotiations are so tough and protracted?

Mr. Martin: I think it depends. We have found that some people in some sectors and some organizations approach negotiations both with more clearly defined expectations and also with some flexibility in how they think things will proceed. Also, we find many people we're talking to do not actually have mandates to reach agreements.

We don't think the delays have actually been occasioned by us. We have always requested the reopening of discussions where these are needed well in advance of the expiry of licences. We have always been available whenever and wherever required. We go to these meetings with mandates to conclude agreements.

I don't want to single out any of the people who have appeared before you by name. It's not fair, because they don't now get a chance for rebuttal, but yes, it is true that some negotiations have dragged on interminably. We don't think the fault lies with us. We think to some extent it's process.

We have found, for instance, with the elementary and high schools that each province insists on reinventing the wheel and will go line-by-line through agreements that lawyers in other provinces have gone through and found to be acceptable. We think this is a waste of their time. It's a chronic waste of our time and we have made and had rebuffed suggestions for trying to accelerate the process.

So yes, I'm well aware there is the perception we're difficult to deal with. I don't think we are. I think we are generally accommodating where we can be, insistent where we think we have to be, but completely flexible as to where and when we meet. We generally are pushing for the meetings, and generally the people we are dealing with are the ones who seem to find it impossible to reconvene at anything like a sensible schedule.

The Chairman: Thank you, Mr. Martin, and thank you to your colleagues for appearing before us. We appreciate it.

I would now like to welcome, from the Consumers' Association of Canada, Mrs. Marnie McCall, who is director of policy research. Mrs. McCall, the floor is yours.

Ms Marnie McCall (Director, Policy Research, Consumers' Association of Canada): Thank you, Mr. Chairman. Good morning, ladies and gentlemen.

.1200

On behalf of CAC, I would like to thank you for the opportunity of speaking to you today on some of the proposed amendments to the Copyright Act. Before describing our position, I would like to tell you a little about the Consumers' Association of Canada.

We are a national, not-for-profit, volunteer-based organization founded in 1947. We are making plans for our 50th anniversary next summer and hope to see many of you there. CAC is one of the oldest consumer organizations in the world. Our mandate is to represent the interests of consumers in the marketplace through research, education and advocacy.

We have chapters in all of the provinces and territories in Canada. In addition to the national office in Ottawa, where I am, which is staffed by six employees, we have offices in British Columbia, Alberta, Saskatchewan, Manitoba and Quebec. We also have a 1-800 line in Ontario and hope to have an Ontario office open again in the near future. All of these offices, apart from the national office, are staffed by volunteers.

We have approximately 10,000 members and donors in Canada. We publish a periodic newsletter. A consumers' reports magazine in the United States has carried our bulletin five times a year since 1993. That reaches an additional approximately 200,000 Canadians.

We have a consumer network of about 500 people to whom we send out questionnaires asking for their input on consumer issues. We publish questionnaires in our newsletter and bulletin. We also participate with the National Quality Institute in an annual survey of 7,000 Canadian households on consumer issues.

Our work is financially supported by memberships, donations and project grants. This year five projects are being assisted by funds from the office of consumer affairs in Industry Canada. Our ongoing national consumer literacy program receives support from the literacy secretariat of Human Resources Development Canada.

CAC works in five main areas: health; food; financial services; communications, by which I mean telephone, cable and issues related to the information highway; and general marketplace issues.

The proposed levy on blank recording media included in Bill C-32 is a marketplace issue of concern to a large proportion of Canadian consumers, and that's why we're here today. Our brief, which was submitted to the committee in August, focused solely on the proposal to introduce this levy. This is the aspect of the bill that has the largest and most direct marketplace impact on consumers. The bulk of my remarks today will address this issue.

However, before I begin, I would like to speak briefly about parallel importation and access to law. The Canadian Booksellers Association has appeared before you to discuss the provisions of Bill C-32 relating to parallel importation. The Consumers' Association of Canada supports the booksellers' contention that this measure is premature, given the work that is currently being undertaken toward the development of voluntary service standards.

CAC has been involved in the development of standards and other voluntary measures for many years. Our experience has led us to conclude that if the development of standards and guidelines involves a goodwill effort by all of the stakeholders, including consumers or other end-users, the maximum mutual benefit is likely to result.

Voluntary measures and standards are also more easily adaptable to changing circumstances. If consensus cannot be reached on a voluntary standard or if the voluntary measures prove not to be adequate, legislative or regulatory measures can then be considered.

The booksellers really were asking you to give the voluntary process a chance, not to cut it off by imposing a particular relationship on parallel importation issues. We would support that. You can always come back later if it doesn't work and put legislative or regulatory standards on the system.

You have also heard from the Federation of Law Societies of Canada about access to law. CAC shares the federation's concerns about the impact on consumers, both as users of legal services and as taxpayers, of moves to require the payment of royalties for copying legal materials. We support the federation's recommendation concerning the concept of fair dealing to cover the use of legal resource materials.

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With respect to the specific issue of libraries making copies on behalf of their customers, we agree with the view that the issue is not who makes the copy but the use for which it is made. The library is acting as an agent in the transaction, and in agency law it is the motives of the principal - the customer - not the agent - the library - that are relevant to the matter.

Returning to the proposed levy on blank recording media, I would like to make it perfectly clear that Consumers' Association of Canada supports government efforts to strengthen Canada's cultural industries, which is a major purpose of this bill. We have urged the federal government repeatedly to support the creative industries directly, in a transparent manner, and in ways that do not restrict consumer choice.

While we support a vibrant Canadian culture, CAC is opposed to this levy. We believe the proposal is flawed. We have identified six major problems with it, which are described in more detail in our brief than I plan to go into here.

A fundamental assumption underlying the proposal for the new levy is that the vast majority of blank tape is purchased for the purpose of engaging in illegal copying. This committee has heard estimates that 39 million of 44 million tapes sold in Canada in a recent year were used for home copying of copyrighted pre-recorded material, i.e. for illegal copying.

Common sense suggests that this estimate is simply not likely to be correct. As described on page 4 of our brief, standard-sized cassettes, like this 60-minute tape, can be used for a wide variety of perfectly legal purposes. We go into some detail in the brief about them, but to summarize here, they're used by news-gathering media; they're used for educational purposes - in distance education, much is done by sending audiotapes of recorded lectures to students in distant locations; for legal proceedings, as court proceedings are more and more being recorded by tape systems rather than by court stenographers; research and writing; rehearsal purposes; professional recording; personal communication, or letters on tape.

In addition to these uses, which were described in the brief, blank tape is also used by radio stations in order to meet CRTC requirements, by Parliament and legislatures to record the proceedings of committees like this and of the House; and by air traffic control services and by police and other emergency services.

Now, if we're referring to the figure of 39 million out of 44 million tapes being used for illegal purposes, and we look at all of these legal purposes, you begin to question the validity of that figure, and that is the assumption that underlies the entire proposal for the levy.

It's true that some of the recording for, for example, the House of Commons proceedings or legal proceedings or emergency services may be recorded on reel-to-reel tape or increasingly on digital audiotape and computers. That tape would also be subject to the levy. It's not just on cassettes like this one. The numbers still don't make any sense.

That's of very great concern, because if the assumption that almost 90% of the tape that is purchased is used for illegal purposes is wrong, then the whole foundation for the levy becomes suspect.

Lumping the wholly innocent, non-infringing tape consumer in with the ``thieves'' might be acceptable - and I'm putting the emphasis on the ``might'' - if the rate of theft were as high as 90%. Any justification for fining the innocent rapidly erodes at any level less than this.

I would really suggest that the justification for doing this has to be when the usage is getting very close to 98%. Then you could justify imposing it, I think, on everybody because the innocent would be a very, very small number. In principle, imposing it on somebody who is innocent violates the principle that the innocent not be punished, but politically probably most people would agree that if the rate of theft were 98%, those few people who were innocent - that would be a reasonable cost of catching the guilty.

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I'd just like to point out that it's also little tapes. Anybody who uses one of these, or anybody who has an answering machine, uses the small tape. These will also be subject to the tax - at least, we don't know what any regulations or exemptions might be. There has been a suggestion that the mini-cassettes might be exempt because people don't normally copy CDs or music onto these kind of tapes. That may be a solution, but it doesn't get at the principle, that the legal uses of tape far, far, far exceed the amount of illegal use that's going on.

This brings me to the next objection - which is the first one I address in the brief; I'm going a little bit out of order in this presentation - that the levy, since it catches all tape consumers alike regardless of what they use the tape for, is actually a tax. The way it is structured, given that it does not differentiate between those who use tape for illegal purposes and those who use it for legal purposes, behaves much more like a tax, even though the collector is not the national revenue department but will be some other agency. It functions very much like income tax. All of us pay income taxes whether or not we use every single service provided by government.

Not only does the levy behave like a tax - and I would argue that it really is a tax - it's an invisible tax. Because it is assessed at the point of import or manufacture, the levy becomes embedded in the price. GST and PST will therefore be paid not just on the price of the tape, but on the levy that is embedded in that price. So this is tax on top of tax. This is exactly like paying interest on top of your interest if you don't pay your credit card bills at the end of the month.

To the average consumer, this may mean an increase of as much as 60% to the cost of blank cassettes. This is a 60-minute tape - it's not the highest quality. Often people buy 90-minute or 120-minute tapes, but this is a standard 60-minute tape that costs about a dollar.

The numbers being bandied about for the levy are in range with what's going on in other parts of the world - somewhere between 35¢ and 40¢ a tape. Add that to the cost of $1. Add the GST and PST on the retail price, and you're now close to $1.60. That assumes that the levy is added at the retail price. It's actually added a lot earlier, so GST and PST has also been paid on the wholesale price, and then it's been paid on the retail price. So the increase is more than 60%. It's at least 60%, in the retail price of a single tape.

The minister, when she appeared before you, estimated that this levy would cost consumers about $12 million a year. That is a lot of money when it's not at all clear that the benefits claimed for the levy are going to show up.

I'll get to the proposed benefits of the tape in a moment. You also heard from the European Tape Industry Council about the potential consequences of such an increase in the retail price in terms of cross-border shopping, smuggling, and grey market sales of blank tape. We've also discussed this in our brief so I won't go into it in detail here, except to say that a 60% increase in the retail price of anything - and this probably works out to about 100% increase at the wholesale level - is a pretty good incentive to try to get it cheaper some other way. All of the other ways involve taking away whatever benefits there may have been proposed for this bill. They will undermine those even further and make this proposal even less likely to be effective.

Regardless of the rate, the levy may also be damaging to the recording industry itself. As I mentioned, if the levy increases the retail price of the blank tape by at least 60%, it probably raises the wholesale price about 100%. Recording studios and tape duplicators purchase tape wholesale on which to record performances. Their product then becomes one of the pre-recorded sound recordings that supposedly are being illegally home-copied on all the blank tape.

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There is, however, no equivalent to the input tax credit for GST, so that tape distributor, that person who is taking a performer's performance and placing it on tape, is going to pay the same levy as somebody who steals that by illegally copying that tape. There is no offsetting credit for that production.

The increased price of tape may also put first recordings out of the range of new artists, and may in fact put some of these small studios out of business. Given that the intention of the legislation is stated to be to strengthen Canada's cultural industry, the proposal that puts out of business some of the essential factors in that cultural industry is hardly a sensible proposal and surely could not have been the intention of the legislation.

To summarize before I answer your questions, we're opposed to the levy because it's structured as an invisible tax; it penalizes the law-abiding as well as the copyright-infringing consumer; it has the potential to seriously distort the market; and most importantly, for a measure that purports to aid Canadian artists, it discriminates between groups of authors, performers and producers on the basis of their medium of expression.

That was a point I forgot to mention earlier. By confining the levy to audiotape, we are imposing a system that discriminates very much among artists. This legislation is intended to benefit artists, so again, this is another reason that this proposal is not well-thought-out.

Ladies and gentlemen, on behalf of CAC, Canadian consumers and Canadian cultural industries, I urge you not to adopt this proposal. Thank you for your attention.

The Chairman: Ms McCall, the CAC has always been a very important voice for consumers, and I think you have brought a very important issue forward.

I would like to ask the members now to open up their questions. M. Leroux.

[Translation]

Mr. Leroux: I agree with the observation just made by our chairman. However, I would like to make a few remarks. I'm not in complete agreement with what you have raised with this question.

Given that the bill seeks to strike a balance between the user, the rights holders, and the performers and producers who have neighbouring rights, I don't think that wanting to give the rights's holders their fair share of money can be compared to a hidden tax on blank audio cassettes. It is true that the manufacturer who is requested to pay royalties on cassettes will certainly try to pass on this cost to the market place.

What we're trying to convince each other of is the fair share that is due to creators and performers. I don't think this should be interpreted as a plot to impose a hidden tax on consumers. I will ask you later whether you have any figures and studies to show us. Everyone knows the obvious use for cassettes. Everyone records music, buys cassettes, gives them to someone who records them, etc. Everyone is well aware that this is common practice. I imagine that this is also done in your own family.

The question raised by this is the mechanism to obtain compliance. Copyright is being violated. This is illegal copying. How can we get a royalty on this by thinking that this is remuneration for a creator or performer? It has been mentioned that artists and musicians have been known to have annual incomes of $13,700 or $13,900. From the standpoint of creators, I don't think that fair remuneration has been achieved.

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Given this, I prefer to believe that there is no plot to impose a hidden tax. Rather, this is an attempt to obtain money from manufacturers and redistribute it among authors.

You're challenging all these figures. Aren't you suspicious about the figures being advanced - one million dollars - in relation to users? Do you have figures or studies that support your statement, or at least support your denial of statements made by others?

I would like you to tell me in concrete terms what this means in terms of numbers. Do you have studies or very specific evaluations on the issue of blank cassettes, among other things?

[English]

Ms McCall: No, we don't have any figures about blank tape. As for the figure of 39 million out of 44 million, I'm not sure which witness brought that to you, but that figure has been mentioned by a number of people on the task force.

I've worked with the media, radio stations, newspapers and in the judicial system and I've seen the amount of tape used there. There's no way that is only 5% or 10% of the tape, and that's not counting what's used in the legislatures and Parliament and the committees and all of the work that is done here. On a common-sense level, those figures don't make any sense. You could probably go to the provincial justice departments to find out the volume of blank tape they purchase each year for the purpose of court proceedings, and I think it would clearly undermine the validity of this39 million out of 44 million figure.

With regard to your other question about the goal of the legislation and adding neighbouring rights, which is very important to artists, we're not at all challenging the notion that Canadian cultural industries need support, or that it may be appropriate for the federal government to take action to support Canadian artists.

I was president of the Calgary Folk Festival for a number of years. I'm very familiar with a lot of Canadian artists and I know how difficult it is to make a living. I agree that there should be compensation for copying of work, but I don't think this is the best way to go about it. I believe that a multi-stakeholder consultation process to develop an appropriate method of compensation would be fruitful.

I don't think anyone is arguing that there should not be compensation for the work that artists do, but even with regard to neighbouring rights, you heard from l'Union des artistes and l'ADISQ. There are problems with the way that has been structured as well, which again suggests the need to sit everybody down and figure out how we are going to get more money to the performers, producers, composers and actors, and why we are excluding actors by focusing on audiotape and not videotape.

If the purpose is to compensate performers and producers, and we're focusing on one sector of the industry and not the industry as a whole - that doesn't make any sense either, so let's sit down and figure out a reasonable way -

[Translation]

Mr. Leroux: If it wasn't a royalty directly to manufacturers, how would you see this? What kind of mechanisms would you like to see, since you're saying that there may be others? Which ones would you advocate?

[English]

Ms McCall: We have not explored what a good system might look like, but we do have certain principles that would be applicable in the development of one. If some notion of a levy on recording media were on the table, one of the principles we would urge is that the levy be put as close as possible to the behaviour you're trying to modify. It is not the importer or the manufacturer of the blank tape who is doing the illegal copying, it's the purchaser of the 60-minute tape.

You're absolutely right - everybody does it and nobody feels guilty about it, and there are arguments that it stimulates the purchase of recorded music, which is a benefit. I don't know how you trade those off. For many years CAC has opposed taxes that are buried in the price. We opposed the manufacturers sales tax and we were very vocal in urging that the GST be a visible tax. Even with the recent changes, we were insistent that the tax be shown on the receipt. So one of our principles is that it not be buried.

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[Translation]

Mr. Leroux: But would you agree that in the current situation, we could make an effort by saying that there is a remuneration, a royalty in the price asked by manufacturers? It could be said that this is not a tax, but revenue to be redistributed to people for whom these are wages. In my opinion, this is a matter of demonstrating a certain degree of openness. We're trying to look at all this. It can be said that this is not part of the process of applying a tax on a product, since there is a whole process for the redistribution of money and this is in fact remuneration for rights holders.

You don't have any solution or mechanisms to suggest to us, but we have a bill with a mandate to reopen it in five years, which we would like to pass in the best possible conditions while trying to strike a balance between users and rights holders. Shouldn't you at least try this out and review the mechanism in five years in the light of experience? Instead of withdrawing the bill, shouldn't a step be taken, given that this money will be used to compensate artists?

We're not talking about just anything here. This money does not go into the government coffers, but in the pockets of artists.

[English]

Ms McCall: If the provision is passed as it is, I think there needs to be a well-thought-out consultation process about the regulation, because who is going to pay, how much they are going to pay, whether there will be exceptions for mini-cassettes and educational - all of that will be dealt with in regulations. It's very important that if the provision goes ahead, the consultation process takes place around the regulations.

I think we can learn from the experience in Europe. We don't need to make the same mistakes that were made there. We can look at various things. For example, in Belgium the proposal originally was videotape, audiotape and computer diskettes. Anything you could copy anything on was caught, and the levy was relatively low.

That's one way of balancing it off. The impact is spread much more broadly and the impact on any individual is much less, making it both more acceptable publicly and getting more money to the collective, which is collecting the levy and then distributing to the artist. That's one way.

I'm speaking personally here rather than as a representative of the Consumers' Association, but there are many things wrong with the cultural industries in terms of exploitation of artists. Many artists could be receiving more money than they are now if they were not exploited, or were not in a position to be exploited, by record companies, production companies or whatever.

There are also many other ways to address the poor status of the artist in this country. Legislation on the status of the artist is obviously a start toward that end. This is not the only solution. I think some people would like it to be the only solution, but there are other ways.

The Chairman: Mr. Abbott.

Mr. Abbott: It will come as no surprise that I'm in full agreement with you on the blank tapes, particularly, as you point out, because it is an invisible tax by the Liberals. They're talking about taking the person who is shut in, who would like to go to a church service, who would like to attend a lecture or go to an educational institution, and slapping them with this tax on the tape of the thing they would like to go to. I can't see how in the world this is going to work.

However, if we work on the assumption that they will probably go ahead and impose this, the issue is where it should be levied. In other words, I agree with you completely. I would like to see it wiped out.

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But let's deal with the possibility that we could end up with the tax. If we assume the 37¢ will be seen as a cost of goods sold - and it will be, because if an importer gets a tape in Canada at 50¢, for example, and they apply 37¢, it becomes 87¢ - that 37¢ will be then subjected to the mark-ups of the importer, the wholesaler and the retailer. After the person says they will pay you $1.89 for the$1 tape, it will then be subjected to the provincial sales tax and the goods and services tax. So instead of a $1 tape plus PST and GST, suddenly we're talking about a $1.89 tape plus PST and GST.

If they are going to go ahead and apply this 37¢, do you think it would be practical if, instead of doing it that way, it was a visible tax? In other words, if we were to say here's your $1 tape, your PST, your GST and your 37¢, the artist still gets the 37¢, but it's 37¢ unencumbered by other mark-ups and taxes. Do you think that would be a practical way of doing it?

Ms McCall: I don't know whether that would be a practical way of doing it. If you now have to split out three things on our cash register, I think there might be serious implementation problems.

As a general principle, CAC's policy with regard to all kinds of sales taxes, value-added taxes or whatever is that they be at the retail level. We're opposed to sales taxes because they are regressive taxes, but given that things like sales taxes exist, they should be at the retail level and they should be on as broad a base as possible. So consistent with our GST policy, we would say that videotape, audiotape, computer diskettes, digital tape for computers, zip drives, CD-ROM drives, whatever - anything you can record anything on should be caught and the levy should be as low as possible.

When when discussions were going on about what the GST would look like, we proposed that there be no exemptions. The research we did at that time suggested that if there were no exemptions, the rate could be 4%. The rate in Belgium, I believe, was 8¢ or 9¢ for 60 minutes. That would be a much more reasonable level if you were going to do it. If you did audio, video and all computer-based forms of recording, the levy could be 2¢ or 3¢ and still generate a significant amount of money for redistribution to artists.

Mr. Abbott: Instead of it being invisible at the entry level, however - I'm thinking of British Columbia, as I'm not familiar with the legislation in other provinces. For example, with automobile tires, a $5 or $6 disposal fee per tire is applied when it comes off your car. In other words, if I pay$90 for a tire plus balancing, taxes and so on, it's detailed that I have a $6 charge for the disposal of that tire. While I'm sure retailers would prefer not have a separate 37¢ item on there, in the interests of the consumers - If they are going to be applying this 37¢ tax, I think it would be a good idea if they applied it visibly and so that it's not caught up by PST and GST.

Ms McCall: CSC would certainly agree with that position. I would argue that if it was done at the retail level, it could be considerably lower than the mooted 37¢ or 38¢. I don't think that figure is set in stone. Those who think there is something wrong with the figure should talk about other levels at which it might be set.

Mr. Abbott: Thank you.

The Chairman: Thank you, Mr. Abbott.

Ms Phinney.

Ms Phinney (Hamilton Mountain): Thank you.

I would like to clarify something for Mr. Abbott and anybody else who might be confused. A tax is set by the government, collected by the government and put into the government coffers. A levy is not set by the government. In this case it would be set by the board. It's not collected by the government and it's not put in government coffers, it is redistributed to the artistic community. There's quite a bit of difference between -

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Mr. Abbott: It's not a tax.

Ms Phinney: It's not a tax, it's a levy, just in case that wasn't clear to anybody.

A voice: Politics 101.

Ms Phinney: Thank you for joining us today. I know the general public has a lot of respect for the work you do and the help you give to consumers. Do you do studies within your organization?

Ms McCall: We do, but having five staff people and the rest being volunteers, we have not always studied every issue on which we wish to make a public statement.

Ms Phinney: The figures used in here, the 39 million of 44 million tapes, as was mentioned earlier, were done by a music industry task force, I think.

Ms McCall: I believe so. I believe SOCAN was a participant in that task force.

Ms Phinney: Can you confirm whether you have done any studies or any -

Ms McCall: We have no independent figures. It's just that on a very common-sense basis, it doesn't make sense.

Ms Phinney: But you don't have any facts about the number of blank tapes that are not used for copying sound recordings?

Ms McCall: No.

Ms Phinney: Okay. You mentioned cross-border shopping in your report somewhere. Can you provide the committee with any data documenting the anticipated cross-border shopping or black market figures? Do you have any data on that?

Ms McCall: No, we don't. We looked at the information and research done by the European Tape Industry Council on what had happened in the EU countries when the levy rates varied from one country to the next. Some countries had none, some had very high and some were in the middle, and the problems they experienced were fairly obvious. We saw seen what happened with cigarettes and now with alcohol. If the taxes are too high or the perceived price is too high and there is an alternative way of getting it at a lower price, it's human nature to do that.

Ms Phinney: But you don't have any stats on this?

Ms McCall: No, we don't.

Ms Phinney: Okay. In your brief you suggested that the retail selling price of blank tapes could increase by about 60%. That was another figure that you had worked out, and it came to approximately 60%.

Ms McCall: Right.

Ms Phinney: How can you be certain the levy will impact on the retail price to this extent? We don't know yet precisely what the levy will be, or whether it will be marked up throughout the distribution chain or simply absorbed the manufacturers and wholesalers. How can you come up with that figure if you don't know those facts?

Ms McCall: There are two things. One is that most things get passed along to the consumer, and there is a limit to how much of an increase the manufacturer or wholesaler can swallow. If you're looking at the wholesale price of an average quality tape being 50¢, and you add 37¢ to that, that's a huge impact and it's highly unlikely the manufacturer or importer is going to swallow all of that. They may swallow part of it, but you can't take that kind of hit.

Ms Phinney: But that 37¢ isn't sure yet.

Ms McCall: No, it's not, and that's one of the difficulties in talking about this. Nobody knows what it's going to look like, what it's going to cost, how it's going to be administered or who's going to collect it, and people are asked to make decisions based on very little knowledge of anything at all.

Ms Phinney: But it might not all be negative.

Ms McCall: It might not all be negative, but this is why I'm suggesting that if the proposal is passed as presented, there be a good consultation process around developing regulations to ensure that it is as beneficial as possible to as many people as possible, and imposes the least amount of detriment on other people.

Ms Phinney: Thank you.

I have one more short question. You referred to the Canadian Booksellers Association and parallel importation, and that they had suggested the measures put in there might be a little premature because they are moving toward development of voluntary service standards, and that you feel they should be given more time to do this. How long do you think these parties should be given - five years, ten years, or until the third phase? How would one judge how long to give them?

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Ms McCall: There's not a sort of average timeframe for developing standards. I think that everybody involved in this one seems to feel they're making progress, and they want to continue making progress.

So I see that as very positive. Until you know whether there's going to be a consensual standard, the timeframe is probably not in the area of five or ten years; it's maybe in the area of one to two years, and maybe even much faster than that.

An alternative way of addressing this is to pass this as sort of a threat over the head and not proclaim it until it's clear that no adequate voluntary resolution is going to be found. That saves going through the entire legislative process. If it never needs to be proclaimed, so much the better.

Ms Phinney: Thank you.

The Chairman: We are running 15 minutes behind our time this morning, so I'd like to accept one brief question each from Mr. O'Brien, Mr. Arseneault and Mr. Leroux.

Mr. Arseneault (Restigouche - Chaleur): I'll pass, Mr. Chairman.

Mr. O'Brien: I appreciated the presentation, but much of it, it seemed to me, is anecdotal or an opinion in nature, which is fine.

You challenged the validity of the number of illegal uses of tapes, but you have no statistics to refute that. But then, if I'm correct, you went on to say that if the guilty rate was up to 98%, then it might be all right for the government to bring in this levy because the percentage of the innocent would be so small.

Then in answer to a question from my colleague, Mr. Leroux, you said that everybody does it and nobody feels guilty about it. Isn't that conceding that 100% of consumers at one time or another - ? Those are your exact words, madam. Can you explain what seems to me to be a bit of an inconsistency?

Ms McCall: Yes, it is an inconsistency in that sense. I'm sure there are some people who are either not old enough to run the equipment or who really never have done it. I'm not sure that every single Canadian is guilty of home copying, but that doesn't account for all of the other uses for which they may use tape. The fact that everybody may run a red light once in a while doesn't mean that everybody runs every red light they see.

Mr. O'Brien: That may be, but it may not be a very good argument for red lights, though. Isn't that the point? That's the point this committee's going to deal with.

Ms McCall: That may well be true.

Mr. O'Brien: We saw some pretty graphic evidence right on the tapes that the manufacturer is targeting the copying of CDs, etc. Do you have any targeting that manufacturers do on tapes for any other specific purpose? I'm just trying to find contrary evidence.

Ms McCall: I'm sorry, I don't understand what you mean by the targeting of manufacturers.

Mr. O'Brien: We saw manufacturers bringing in tapes. Right on the tapes, it says that they're excellent for CD reproduction.

Ms McCall: I'm clearly not up to speed here.

Mr. O'Brien: Common sense tells me, madam, that if they are targeting the market that way, then maybe 39 million out of 44 million isn't too far off.

My question is this: do you have any evidence of manufacturers advertising to people other than for what amounts to illegal copying? Is there any evidence of other kinds of targeted advertising?

Ms McCall: I'm afraid, quite frankly, I don't know.

Mr. O'Brien: Okay. Thank you very much.

[Translation]

The Chairman: Mr. Leroux, one last question.

Mr. Leroux: I would just like to make a comment concerning cassettes. Representatives of the education sector came to demand the right to these royalties, because they could make cassettes for teaching purposes.

At this rate, this will never end.

I just wanted to make that comment.

[English]

Ms McCall: It's one of the difficulties with imposing it on all media without considering what tapes are used for and how much is actually - To say that you want to impose a levy on all blank recording media for the benefit of Canadian artists is one thing. To say that it's because of the incidence of illegal copying is perhaps a different rationale.

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The rationale that is given is based on a huge amount of illegal copying. Maybe it's 50%, which is still a huge problem that does need to be addressed. But with the amount of tape that's used in this House alone and by the judicial system throughout the country, I simply can't buy the number. If that is the reason for imposing it on blank audiotape, then I think that's on a faulty foundation. It doesn't explain why you were excluding actors by not covering videotape.

I don't know whether a levy on blank recording media is the way to go or not. The problem the Consumers' Association of Canada has is that there are so many inconsistencies and things that don't make sense about the proposal that we would like to go back to the drawing board.

Our preference would be for this to be deleted from the legislation. Some sort of consultative structure, a working group, should be created to develop good methods of compensation, appropriate methods at appropriate levels, for the workers in our cultural industries. We just don't think this is the tool. We do think there is a problem that needs to be fixed. We just don't think this is the way to do it.

I do know the difference between a levy and a tax. In my brief I say it behaves more like a tax.

Mr. O'Brien: That was for Mr. Abbott. Mr. Abbott likes to lecture us on things, but once in a while we like to help inform him.

Ms McCall: I see.

The Chairman: Ms McCall, as you've heard, your appearance here has stimulated a very interesting debate on an important issue. We appreciate your appearance here. Thank you very much for coming.

Ms McCall: Thank you very much for hearing me. If there's a consultation group struck, we would very much like to be invited.

The Chairman: Thank you.

I'd like to welcome the Canadian Historical Association. Mr. Jim Miller is the president.Mr. Don Wright is the English-language secretary.

I should say, Mr. Miller, that you seem to have a lot of friends. We've been approached by many MPs, such as Georgette Sheridan from Saskatchewan, John English from Ontario, who is an historian himself, and many others who wanted to make sure you appeared today. We are very happy to see you. You have half an hour, Mr. Miller.

Dr. J.R. Miller (President, Canadian Historical Association): Thank you, Mr. Chairman. I'm pleased to hear that historians have friends.

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Thank you for the opportunity to express the views of the Canadian Historical Association, la Société historique du Canada, on Bill C-32. Before outlining our position on this important legislation, I'd like to introduce the other representative of the CHA who is accompanying me. Don Wright is our English-language secretary.

Dr. Claude Beauregard, our treasurer, and Professor Béatrice Craig, our secrétaire de langue française, are unable to attend, as is Joanne Mineault-Dean. Dr. Beauregard is on his way, we think, to Zaire on behalf of the Department of National Defence. Professor Craig is teaching a class at the University of Ottawa.

The CHA is a national organization with some 1,700 members drawn from all regions and many professions and occupations. While a large portion of the membership is academic, consisting of both faculty and students in universities and colleges, many others are archivists, school teachers, members of local historical or genealogical societies, journalists, lawyers or citizens with an interest in the study and dissemination of history.

While an interest in the history of all ages and regions is found in our ranks, the history of Canada and its peoples is the principal concern of the vast majority of CHA members.

Our members are both creators and users of copyright material. Naturally, academic members in particular produce books, articles, films or videos and other works that attract copyright protection and often generate revenues in the forms of royalties, permission fees or reproduction fees from bodies such as CANCOPY or the Union des écrivaines et écrivains québécois. For that matter, the CHA itself has been the beneficiary of payments from CANCOPY.

However, many of our members are also consumers of copyright material, whether for our enjoyment, classroom teaching or, most frequently of all, private study and research. In particular - I'll explain this in a few minutes - we are heavy users of unpublished works deposited in archives. These are works that are very often the largest part of the raw materials from which we fashion our finished historical products.

Since members of the CHA are both creators and consumers of copyright material, we can appreciate both the ways in which Bill C-32 improves the situation with copyright material and a couple of ways in which it has the potential to create very serious problems for historical researchers.

We are cognizant and appreciative of the fact that Bill C-32 provides major advances for those of us who use copyright material for instruction in classroom settings, for archivist members who need to make conservation copies of fragile documents in their permanent collections and for researchers who wish to use published copyright materials for research and private study.

Probably the most important of all the advances found in Bill C-32 from our point of view is the change in copyright protection for unpublished works from in perpetuity to a period extending 50 years beyond the death of the creator of the work.

We recognize that all these and other aspects of Bill C-32 represent significant reforms from which historians will benefit. We wish to record our appreciation of these features of the bill.

However, as people with a lively interest in historical research, more especially research in archival collections of unpublished materials, and as users of copyright materials, we are also painfully conscious that shortcomings remain in the bill that will severely impede archival research, make it more difficult and expensive, and generally impair the ability of historical researchers of all sorts and interests to carry out research.

We note parenthetically that judging by the original list of witnesses this committee decided to hear, the CHA is the only body of researchers using mainly unpublished archival materials who have had an opportunity to comment upon these serious shortcomings. It is on those aspects of the legislation that I wish to devote the remainder of the presentation.

As our written brief emphasized, our difficulties with Bill C-32 concern principally proposed section 30.1, which is on libraries, archives and museums, and proposed section 7, which deals with the term of copyright in posthumous works. To some extent, we are also interested in proposed section 29, which is on fair dealing, although that is of a lower priority in our opinion. We'd like to address these areas now.

The CHA's problem with proposed section 30 is that it does not make explicit that it is no infringement of copyright for a researcher, or an archivist on behalf of a researcher, to make a single copy for private study or research of an unpublished work on which copyright still exists. We recognize that an archive, museum or library is permitted by this section to make a single copy in its permanent collection for conservation purposes. We also recognize that proposed section30.2 makes it clear that there is no infringement of copyright in making a single copy of a non-fiction article for research or private study. We note too that educational institutions are permitted to make copies of printed copyright materials in certain circumstances.

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However, in our opinion, what the bill lacks is an explicit statement in proposed section30.1 that it is no infringement of copyright for a researcher or an archivist doing so for a researcher, to make a single copy for research or private study of an unpublished copyright work in a permanent archives collection. For reasons that I will explain in a moment, this constitutes a grave impediment to the kind of archival research on which most historical research relies.

The difficulties caused by this omission in proposed section 30.1 are compounded by some of the provisions, especially those covering a transitional period - this is proposed subsection 7(3) - following the coming into force of Bill C-32.

Briefly, these provisions will extend copyright in an unpublished work by a person who dies after the coming into force of the bill for 50 years after the demise of the creator of the unpublished work. For people who died less than a century prior to the coming into force of the measure, copyright on their unpublished work will last for 50 years after the coming into force of the legislation.

This means that the unpublished papers of figures such as Prime Ministers Laurier, Borden, Meighen, King and Bennett, all of them deceased for some time now, will be covered by copyright until at least 2047. These provisions, especially those intended for a transitional period, strike the CHA as excessive. They will make it impossible for a researcher doing work on, for example, Sir Wilfred Laurier's relationship with journalist and politician Henri Bourassa to make a photocopy of a complete letter or other work in the Laurier papers.

The same comment applies of course to a vast array of unpublished documents in archives all over the country that are of great historical significance and interest to researchers.

Why do these provisions of proposed section 30.1 and proposed section 7 alarm the Canadian Historical Association?

In the case of proposed section 7, especially the transitional provisions, the proposed changes will impede and restrict photocopying for research purposes for a longer period than seems either necessary or socially useful. It seems to us that a shorter period, such as 30 years, might be a more appropriate length of copyright in posthumous unpublished works. If the standing committee is concerned that a shorter period would not sufficiently protect a creator's privacy, the committee should bear in mind the necessity to distinguish in law-making between copyright and privacy.

A donor of papers to archives, or a literary executor acting on behalf of the estate of the creator of such materials, will specify whether some parts of the collection should be closed or restricted, and if so, for how long the closure or restriction should be in place. There is no need in a copyright law to deal with such matters because they are routinely covered by the agreements that donors or their estates make with archives when papers are deposited.

We urge the committee to amend proposed section 7, in particular its transitional provisions, to shorten the period of copyright in posthumous works and to reduce significantly the period of protection accorded works created by people who have died less than a century prior to the coming into force of the measure.

It is, of course, the impediments to archival research created by the granting of copyright for a lengthy period in posthumous works that leads to the problems that historical and other researchers have with proposed section 30.1 of Bill C-32. As now drafted, the bill does not permit the making of a single copy for the purpose of research or private study of a complete unpublished document still covered by copyright in the permanent collection of an archives.

Given the way that most archival researchers now carry out their work, which is by making a single photocopy of a lengthy document that is relevant to their research, section 30.1 will force researchers to make elaborate notes by hand, typewriter or notebook computer while working in the archives. Even this method runs the risk of introducing errors during the transcription or summarizing of the document. More serious, however, is the inconvenience and expense that the prohibition on making a single photocopy will inflict on researchers working in archives throughout Canada.

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As the national archivist Dr. Jean-Pierre Wallot explained to you during his appearance on October 29, most researchers now make considerable use of photocopying to ensure accuracy and to save time in the archives. Researchers will secure a single photocopy of important documents as expeditiously as possible, leaving the careful analysis of the material until they have returned to their home base.

This is especially true for researchers who must travel considerable distances to get to the archives they need to use. Given the transportation costs and the subsistence expenses they incur while away from their home base, efficient use of their research time is essential.

The committee should be clear that this is a major problem for archival researchers, especially in the 1990s. To give you a concrete example, the cost to the CHA of my travelling to Ottawa for just one day to appear before you will be approximately $700. If I were able to stay for a protracted period to conduct research at the Archives Deschâtelets of the Oblate Fathers or at the National Archives of Canada, my subsistence expenses would run about $100 per day.

In the 1990s, the cost of doing research away from the investigator's home base is a much more serious problem than it has been in earlier decades. Funds to support historical and other research are shrinking as governments, public institutions such as universities and colleges, and organizations retrench to deal with financial problems.

Researchers in the 1990s have a much more difficult time acquiring funds to support their research. That is why it is especially unfortunate that the proposed copyright legislation contemplates adding to the expense of archival research by preventing the making of a single copy of an unpublished copyright document for the purpose of research or private study.

If the financial environment creates difficulties for all researchers, then the case of student researchers is especially acute. The same forces of retrenchment to which I referred a moment ago are also reducing the funds available for the support of even our most talented postgraduate students in history and other disciplines.

For instance, whereas the Social Sciences and Humanities Research Council awarded62 doctoral fellowships in history in 1991, by 1994-95 the number had shrunk to 54, then to 48 for 1995-96, and finally to 39 students in 1996-97. Of course, this funding agency is only one example among many of bodies that have had to scale back their financial support for the research needs of our most talented postgraduate students.

It might help the committee to appreciate the students' plight if I provide a concrete example from my students' recent experience. The last academic chore I performed before leaving Saskatoon was to write letters of recommendation for two of my own MA students who were applying to the University of Saskatchewan for funds to come to Ottawa next spring to carry out research for their MA theses.

In the case of one applicant, her expenses amounted to about $500 for travel, $750 for shared accommodation costs, an amazingly low $245 for food, and $300 for photocopying archival material. If Bill C-32 makes it impossible for this student to make photocopies of crucial documents at the National Archives of Canada, she will be compelled to prolong her stay at considerable cost to her personally, or she'll be forced to reduce the amount of research she is able to do.

When students and other researchers do not travel to archives to carry out research, for example, in cases in which they only need a specific document or two whose location they know, they request an archives to make a photocopy and send the copy to them. That course of action will also be impossible under a literal reading of proposed section 30.1 of Bill C-32.

It is the position of the Canadian Historical Association that the restrictions on the limited photocopying of unpublished copyright documents for research purposes serves no public purpose and harms the public interest.

What is at issue here after all is merely the non-profit access to documents whose creators or their executors have decided to deposit them in an archival collection under conditions of access and use that the donors have themselves decided.

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In light of these conditions, the CHA urges the committee to recommend an amendment to Bill C-32 that would add a section, perhaps after proposed section 30.1, that says:

It is not an infringement of copyright for a library, archive or museum or a person acting under the authority of a library, archive or museum to make a single copy for the purpose of research or private study of a copyright work or other subject-matter, whether published or unpublished, in its permanent collection.

If the committee will make this change to proposed section 7, which is copyright in posthumous works, that we recommend, it will remove potential obstacles to historical, genealogical and other research that utilizes the valuable collection of archival institutions. We cannot believe that Parliament ever intended to make research into the heritage of this country, its peoples and its regions more difficult and expensive.

We assume the impediments to such research now found in Bill C-32 are unintended and incidental. Accordingly, the Canadian Historical Association, la Société historique du Canada, urges the Standing Committee on Canadian Heritage to recommend the modest changes we have suggested here.

Thank you for the opportunity to make these points. Merci beaucoup.

The Chairman: Thank you very much, Mr. Miller.

I would ask members to please be brief. We are running behind our time as you know. Monsieur Leroux.

[Translation]

Mr. Leroux: First of all, I would like to thank you for the plea that you have just made. My colleagues will agree that the purpose of your work is to facilitate that of people in your field, research and development, or those who study history, etc. In my opinion, the committee understands that all the work currently done by historians and professors cannot be unduly hampered or slowed down by a bill. My colleagues are trying to ensure that certain sectors of society can have access to the works of authors to do their jobs. I think we all agree on that.

Mr. Miller, you seemed surprised to note that you had friends, but I must say that many of them have written to us. These days, we receive a lot of mail from your friends who are seeking these objectives. So we are sensitive to your analysis and observations.

What is going on in terms of your research work? What is the process involved in the case of accessible documents that are published and those that are not, so that we can understand what's at stake in this process? You say this presents a problem for unpublished documents.

[English]

Dr. Miller: I'm pleased to hear about our friends again, Mr. Leroux. I find that very reassuring.

Perhaps I was overreacting. I was thinking more of dealing with university administrators rather than parliamentary committee members.

As your question assumes, historians use both published and unpublished works in considerable quantity. We operate very similarly, I think, in both cases. If the material we are going to use is relatively brief, we will summarize or paraphrase it in our own notes. If it is lengthier, we would find it more efficient and accurate to make a photocopy.

In the case of published works, of course, when operating in public institutions, we have to be - and we are - aware of the restrictions and regulations that govern these. We have to make copies accordingly, trying to follow the regulations that exist.

[Translation]

Mr. Leroux: In the current situation, without the bill, what are the problems you encounter in the course of your work?

[English]

Dr. Miller: I assume your question means under the existing regime of law and regulation.

I think the principal difficulties researchers experience are largely matters of expensive travel. As I indicated, I don't think the copyright law adds necessarily to that at the present time, but the proposed bill would. We don't find the existing copyright regime is a major impediment, but that may well be because whatever the regime is, it is not very often enforced by institutions.

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Mr. Leroux: Okay.

The Chairman: Mr. Abbott.

Mr. Abbott: Thank you.

As Mr. Leroux has mentioned, we have received quite a bit of information from people. I'd like to be very specific. As a representative of the historical society, in your judgment, are your comments absolutely parallel when we're talking about genealogy?

In other words, we have people who are perhaps - not unprofessional, but as opposed to people who are in the business, they have simply started to take an interest in their family tree or another family tree and are doing it as a hobby. Would the comments you've given us today be absolutely parallel for people in that category as well? I just want to confirm that.

Dr. Miller: Our organization represents both professional and ``amateur'' investigators. Indeed, many genealogists are members of the Canadian Historical Association as well. I won't purport to speak with accuracy and confidence for all genealogists, but my impression is yes, our methods are very similar and many of the materials we use are very similar.

The reason I speak with a bit of confidence on that is I have been able to consult with many genealogists by means of e-mail and Internet to explore these questions, and when we posted notices about this matter on a discussion list called H-Canada, we found genealogists reacted in exactly the same way as historians and others did.

So as far as I'm aware, our concerns and interests are very close, if not identical.

Mr. Abbott: We've distilled it, though not exclusively, to specific things such as land grants and records; parish records, either original or microfilm; census records; family papers; journals; and diaries. Those seem to be the major area of concern to them.

But I'm just curious, and perhaps you can help me understand. Is this issue, particularly over unpublished works, an issue that is presently there and has not been corrected by Bill C-32, or in fact do the provisions of Bill C-32 exacerbate the problem?

Dr. Miller: I'm afraid I have to give you a yes and no answer to that.

In regard to copyright of posthumous unpublished works, Bill C-32 is, as I said, an improvement, because it sets a specific, finite period of copyright. At the present time this copyright is in perpetuity. So in that sense Bill C-32 is an improvement.

However, it is a step backward in the sense that the present regime of copyright does not seem to be enforced so far as unpublished works in institutions are concerned. Our concern is that once the law comes into effect, there will be a greater willingness to enforce or a greater concern about legal liability of public institutions operating immediately after the passage and implementation of positive law in this area.

Mr. Abbott: Just to be clear, though, do your comments apply just to published works or to unpublished works, or to both?

Dr. Miller: To both.

Mr. Abbott: Thank you.

The Chairman: Ms Phinney.

Ms Phinney: Thank you, Mr. Chairman.

Unpublished works are very different from published works in that the author never chose to publish them - diaries, letters and things like that. Given that privacy issues as well as copyright issues are associated with unpublished works, doesn't it seem reasonable that the copying of the works be more restricted than that of published works?

Dr. Miller: It's our respectful position that the answer is no. Material in archives, museums and libraries is there because people have donated it.

In other words, the creators or their legal descendants, their executors, have chosen to deposit the papers in an archives. When they deposit a collection of papers, they will lay down what restrictions as to access and privacy matters they wish to impose. They negotiate those with archival repositories. Those restrictions, if any, are implemented and policed by the archivists.

So privacy concerns on the part of the creators and their literary executors are covered by the practices that are now in place among archivists. Copyright law is not needed to try to deal with privacy issues.

.1315

Ms Phinney: So any new law coming out wouldn't overrule some restriction that a family might have put on those 10 years ago?

Dr. Miller: I can't answer that question. I don't know about the legal implications. I think the spirit of the terms now in Bill C-32 clearly go against the wishes of many people who have already deposited their records. It would set up a different sort of regime from what they chose.

Ms Phinney: If the relevant exceptions for published works in Bill C-32 were extended to include unpublished works, as you requested, who would control or police such exceptions? Do you have any ideas on how this could be done?

Dr. Miller: It's our understanding that the researcher, of course, would have an ethical obligation to abide by the law. In addition, archivists would police the regime, because archivists either arrange for photocopying or allow it to occur on machines in their premises. They have very close supervision and oversight of any copying process. An archivist would be in a position, and I think would be quite willing, to enforce those regulations.

Ms Phinney: How would they enforce them? Would they report that person to somebody for having done it or attack them and rip up the material?

Dr. Miller: I think archivists and historians are much more peaceful people than that.

Ms Phinney: I don't mean them. I mean the people who are doing the copying.

Dr. Miller: When a researcher is working in archives and wishes to have a copy of a document made, a request form often has to be filled out. If the form said the researcher wants five copies of such and such a document, the archivist would inform the researcher that we can't and won't do that. It's not legal. We will make one copy for research and private study only. In that very practical sense - just the mechanical sense - it can be and would be enforced, I think.

Ms Phinney: So the archivists would have to take some of their time to stand there and watch what was going on and to make sure that it was -

Dr. Miller: In most cases, archivists now take the documents and send them to another part of their operations for copying, so it wouldn't add any labour or time to the archivists' tasks in this regard.

Ms Phinney: Thank you.

The Chairman: Thank you, Ms Phinney. Thank you very much, Mr. Miller. I think you've made your case with great conviction and clarity, and we appreciate your appearing before us today.

Dr. Miller: Thank you, Mr. Chairman. Thank you, ladies and gentlemen.

[Translation]

I thank you all.

[English]

The Chairman: I would like to welcome Mr. Sidney Margles, president of Standard Sound Systems Co. Ltd., and Mr. Wallace West, vice-president of CHUM Satellite Services.

Before you start, Mr. Margles, I should explain that, as you will recall from our understanding, we added you to the end of the list, so we have a very short time. You can choose to take the 15 minutes you have to make your presentation or to leave some time for questions. It's up to you. We'll have to break up at about 1:35 p.m. because of Question Period and the work of the members.

The floor is yours.

Mr. Sidney Margles (President, Standard Sound Systems Co. Ltd.): Thank you,Mr. Chairman. We've taken note of that. Our remarks are relatively brief. We will be available for questions, because we think that will assist the committee.

[Translation]

First, I would like to thank the committee for having accepted our brief and allowed us to present additional information for your consideration.

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We believe that our presentation may help this committee to improve the Copyright Act.

By the end of this presentation, we hope you will have a better understanding of the unique industry that seems to be unfamiliar to those who developed the first Bill C-32.

Although we will both speak on behalf of our respective businesses and MUSAK CANADA, most of our remarks concern all background music broadcasters in Canada. Indeed, there are almost 40 of us. The stakes are essentially the same for all.

[English]

Mr. Wallace M. West (Vice-President, CHUM Satellite Services): We provide a variety of music programs to commercial and industrial properties. We both transmit and retransmit programs using various means of telecommunications, including satellite, the sub-carrier of FM radio stations, telephone lines, and even specifically produced tapes and computer programs. You might even call it closed-circuit radio.

We are paid for our services through subscription fees. We operate in the North American context. The major source of our program material is the United States. Our colleagues in the United States and, to the best of our knowledge, those who function in Europe in similar business activities are totally exempt from the issue of neighbouring rights.

We seek similar status in Canada. We would like a total exemption from any new charges that we would find difficult, if not impossible, to absorb or pass on to our client subscribers.

Ours is a most fragile industry. The representatives of the Canadian Restaurant and Foodservices Association testified quite vividly before you that if restaurants look at things, they say price is king. That philosophy is reflected towards our industry, not only by the restaurants but by virtually every one of our subscribers. Our experience is that a $1 per month fee increase brings howls of protest, and we frequently lose a customer over that very small amount.

Ours is probably the only industry in which delivery or transportation of our product accounts for as much as half the gross revenue and in which we collect and remit almost one-quarter of what we collect as direct government taxes and SOCAN royalties. This is clearly not the time for us to have to add another royalty. Were it not for other related communication business activities, many of those in our business could not continue to operate in the current economic context.

The Copyright Board of Canada this past September, following extensive hearings, appeared to understand the delicate economic position of our industry when it totally rejected SOCAN's request for significantly higher fees.

As we see it, the question of neighbouring rights for the creator and performer of musical works cannot be justified. Once a song has been recorded for public performance, why should there be a second royalty when there is no added value provided in return?

In most cases the producing record company strikes a deal with the performers for either upfront payment or participation in revenue based on sales of the recording. They do not expect revenues from third parties such as the users of the music. We help the record companies through the public performance of their products. They obviously appreciate this fact, as they supply us with records at no charge or for a very limited fee.

If neighbouring rights are approved, who will benefit? We know full well that performers or performances by Canadian artists in the United States, where the vast majority of our talent seeks exposure for record sales, would not be subject to any neighbouring rights legislation.

There are numerous other issues that we can discuss with you, time permitting, based on our experience. These include the problems of enforcement of existing copyright laws, the lack of public understanding and willingness to abide by the laws, the use of home-duplicated tapes in commercial establishments, the question of convenience copies, the difficulties of retroactive legislation, and in general the question of theoretical versus practical application of legislation in the field, particularly in light of the rapidly changing methods of delivery.

But as we have been limited in our time and are sure you will have numerous questions, let us conclude our formal presentation.

Mr. Margles: Mr. Chairman and members of the commission, we maintain that we should have total exemption from any neighbouring rights legislation. However, if, in your wisdom, we are not deemed eligible for such exemption, we would respectfully request that we be granted a special status, not unlike our current status within the SOCAN tariff and not unlike what is proposed in the legislation for small radio broadcasting stations.

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Within the SOCAN tariff, better known as tariff 16, we are identified as music suppliers. We collect on behalf of SOCAN a public performance fee and receive from SOCAN a special discounted rate for our work in identifying the user, the collection from the user, and remittance of the fees.

If we are not granted a full exemption from neighbouring rights, we therefore request the appropriate amendments in the wording of the legislation so that the music business, as we are commonly known, is specifically recognized. We believe we should be acknowledged and treated as an equivalent to the wireless transmission system as identified in proposed section 68.1 of Bill C-32.

As well, we suggest that the fee we be obliged to pay should be based only on annual music subscription revenues, with a $100 annual licence for the first $1 million of music subscription revenues and any additional fee to be determined by the Copyright Board, with a phase-in period identical to that proposed for radio stations.

Again, thank you.

[Translation]

We thank you. We are prepared to answer questions in both of our country's languages.

The Chairman: We have ten minutes left.

[English]

We'll split the time between the two parties.

[Translation]

Mr. Leroux.

Mr. Leroux: Mr. Margles, welcome to our committee for the second time. You're really spoiled.

Mr. Margles: No, I come to Ottawa quite often. That doesn't bother me.

Mr. Leroux: I would like to get to the subject right away. You talked about exemptions in comparison with the United States. They don't have neighbouring rights, but you're saying that in the United States, there is a total exemption for neighbouring rights. Since they don't have any, what kinds of exemptions are you referring to exactly?

Mr. Margles: The same industry does exist in the United States; naturally, it is much larger. In the United States, there are no neighbouring rights. There even was a public hearing of the U.S. Senate and House of representatives, where the exemption was granted with the approval and support of recording companies and other stakeholders in the industry.

Mr. Leroux: So in the background music industry in the United States, nobody pays any royalties.

Mr. Margles: No. They pay the equivalent of what SOCAN charges, that's all.

Mr. Leroux: All right, we agree. So with regard to copyright, that's established.

Mr. Margles: Yes.

Mr. Leroux: With regard to exemption for neighbouring rights, that's okay, because they don't have any.

Mr. Margles: No, but there was some talk of neighbouring rights in the United States and this was set aside. This industry and the radio industry -

Mr. Leroux: In the context of the bill, we have a clear sense that neighbouring rights are a very important factor in the legislation, one that has been requested now for a long time. We would like to join the bandwagon of 50 countries that have neighbouring rights, etc. You are in the context.

Earlier, you alluded to the Copyright Board with regard to SOCAN and the tariffs. In the framework of SOCAN, arbitration is still going on. There is the Board. The board does set tariffs according to a principle, the ability to pay, etc. Do the current tools give you some security with regard to your ability to pay in terms of neighbouring rights?

Mr. Margles: Let me explain. Up until last year, we had talks with SOCAN regarding rights and normally, we came to an agreement acceptable to both parties. A few years ago, for instance, SOCAN requested a tariff increase of 169%. We said that it was not acceptable. We presented an offer. SOCAN decided to appear before the Copyright Board. This was expensive for us and we had no lawyer. As we stated in our brief, SOCAN identified 42 companies, but they are all small companies, except for the two of us that represent half the revenue of this industry. But we were very pleased, because we did come to a good agreement. We had a decision that clearly stated in seven or eight pages the reasons why SOCAN's proposal was rejected. We hope to negotiate with SOCAN in the future.

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If you believe that the Board should decide on a tariff for our industry, we are prepared to accept its decision.

Mr. Leroux: No, not necessarily. Since the beginning of our hearings, I've always said that there should be free negotiations between the parties.

Mr. Margles: Mr. Leroux, there is a problem for small entities. If there is no collective, I don't know with whom we're going to negotiate and who will collect. Will the amount for the collection of these rights disappear in expenditures for a collective or will it be SOCAN or someone else that has to collect?

Mr. Leroux: We can make assumptions, but let's get back to the principle. We will let the collectives divide up their collections and their mechanisms.

I would like to discuss figures. What is the sales figure of your industry right now and what is the proportion of royalties that you pay at the moment? What is the proportion in your industry?

Mr. Margles: Unfortunately, there is no figure to describe the magnitude of the industry in Canada. We have no association. We don't even know who these 42 companies are. I'm familiar with five in Quebec. There may be two others in Western Canada.

Mr. Leroux: But let's discuss you first.

Mr. Margles: Since we are a private company, I cannot give you detailed figures. I must tell you that the sales of our two companies have dropped since 1990; I can tell you that we pay approximately $100,000 to SOCAN for our share in Quebec and the Atlantic provinces.

Mr. West can tell you how much is company pays SOCAN. That's public information. We pay about half what SOCAN collects from -

Mr. Leroux: Yes, I understand, but since I cannot compare this with the performance of your industry -

Mr. Margles: The performance?

Mr. Leroux: - I can't know what the proportion is.

Mr. Margles: If I were to tell you that there were no profits almost anywhere this year, would that be clear enough?

Mr. Leroux: You don't have figures for the other companies.

Mr. Margles: We know because a colleague has just gone bankrupt. We know that most are small companies.

Perhaps you could ask SOCAN if it can provide you with figures it has or you could ask the Copyright Board if it can give you information on the others.

Mr. Leroux: So we can conclude that nothing is known about the magnitude of your company or the number of companies that exist. Would we have to do the research ourselves?

Mr. Margles: As I said, the only information we have, is that SOCAN told the board that there were 42 companies. They wanted to know who these companies were, but SOCAN refused to tell us. Maybe they're afraid we'll form an association. I don't know.

The only thing I can say is that Mr. West's company has been in this business for about 50 years. We've been at it over 30 years. Recently, with new technology, a company was formed in Quebec that transmits music by computer. Will it survive? We don't know yet. One declared bankruptcy two years ago; but it has been back for the past six months. There is a new company, DMX. We talked to them, but they're not here. They decided not to appear.

The Chairman: Mr. Bélanger.

[English]

Mr. Bélanger: I'll be very quick, then I'll have a final question. You raise in your memorandum the notion of retroactivity. You would ask that no proposed tariff be applied retroactively. Is there anything in the bill that would cause you to suggest that indeed there is retroactivity considered?

Mr. Margles: Not specifically, but we've had the experience - Part of the failure of the system in general is the lack of resources, perhaps, at the Copyright Board, where a hearing takes place. In the case of the last SOCAN hearing, basically for tariffs that were filed for the previous two years - The board does have the right to impose it retroactively, as it did in the case of cable, for example.

Mr. Bélanger: There is nothing in the bill.

Mr. Margles: There is nothing in the bill. We're saying that perhaps there should be something in the bill to say that when hearings take place there should be no retroactivity.

Mr. Bélanger: Perhaps that should be taken up with the board. Generally speaking, unless it's specified, there is no retroactivity.

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Secondly, you say that your industry helps to encourage record sales and that you respond to inquiries for the title or the name of the performer of a tune played in the public area. How many of these inquiries do you get?

Mr. West: That would vary from year to year and from season to season.

Mr. Bélanger: Would it vary from 100,000 to 100?

Mr. West: It certainly would not be 100,000. We may have in the course of six months or one year only two dozen inquires, and yet in another six-month period we may have several hundred.

Mr. Bélanger: But there are never more than 1,000 in a year?

Mr. West: No.

Mr. Margles: But we do have the play lists when people call, and we -

Mr. Bélanger: I understand that. I have a final question, and it's somewhat akin to the mining industry. There are a lot of people who have to pay royalties on the ore body, because without the ore there is no mine. So if there's no music, would your industry exist?

Mr. Margles: If there were no music, our industry wouldn't exist as such. But the question arises as to how many royalties are required in order to have a viable industry.

Mr. Bélanger: The answer might be that there should be royalties for all of those who helped bring this music, so that you can exist.

Mr. Margles: With due respect, I would suggest that it would be up to the Copyright Board to ascertain whether or not the industry could exist if additional royalties were added, and then it may enter into contradiction with SOCAN. I'm not here to plead the case.

Mr. Bélanger: That's fair, but isn't it up to the Copyright Board to set the tariff?

Mr. Margles: Yes, and I guess the Copyright Board would take into consideration our remark that there's no added value being provided. With something that's existed for 50 years and when the record companies have been assisting us in providing that public performance, why change it now?

Mr. Bélanger: I have one final question, Mr. Chairman.

[Translation]

All the presenters we've had, without exception I think, praised the work of the Board. Do you have any particular reason to fear the Board's decisions?

Mr. Margles: Which board? Yours?

Mr. Bélanger: No, the Copyright Board.

Mr. Margles: Not at all.

Mr. Bélanger: Thank you, sir.

[English]

The Chairman: Thank you very much, Mr. Margles and Mr. West. We appreciate your appearance here.

The meeting is adjourned.

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