This is the second part of our copyright Comparison looking at Rules and regulations in canada and the united states. Make sure to check out part 1 that provides an introduction and insight into derivative works in both countries here.
PART 2: Fair Dealing and Fair Use
Fair Dealing
In Canada, the principle of fair dealing is statutorily entrenched in the Copyright Act. s. 29 of the Act states:
29. Fair dealing for the purpose of research, private study, education, parody, or satire does not infringe copyright.
29.1 Fair dealing for the purpose of criticism or review does not infringe copyright if the following are mentioned:
(a) the source; and
(b) if given in the source, the name of the
(i) author, in the case of a work,
(ii) performer, in the case of a performer’s performance,
(iii) maker, in the case of a sound recording, or
(iv) broadcaster, in the case of a communication signal.
29.2 Fair dealing for the purpose of news reporting does not infringe copyright
if the following are mentioned:
(a) the source; and
(b) if given in the source, the name of the
(i) author, in the case of a work,
(ii) performer, in the case of a performer’s performance,
(iii) maker, in the case of a sound recording, or
(iv) broadcaster, in the case of a communication signal.
In addition to some recently entrenched categories like education, parody, and satire, since Bill C-11, four “personal use” (i.e., non-commercial use) exceptions to the exclusive rights of copyright holders now exist in the statute. This legislative expansion reflects the significance of the CCH decision in the Canadian copyright law landscape, as Myra J. Tawfik notes:
Parliament had certainly been free to choose to amend the language of the fair dealing provisions to limit the application of CCH or to abrogate it entirely. The fact that Parliament did not interfere with the ruling in CCH confirms that it has entrusted the interpretive scope of fair dealing to the courts.[42]
First, s. 29.21 creates a new exception for content generated by non-commercial uses to allow a user the right to use, for non-commercial purposes, a published work to create a new work. For example, a consumer could splice scenes from videos and movie trailers to create a fan-made trailer or video.[43] This exception is subject to certain conditions, which include the identification of the source and author, the legality of the original work or the copy used and the absence of a substantial adverse effect on the exploitation of the original work.[44]
Second, s. 29.22 allows “a consumer the right to reproduce, for a private purpose, any work or protected subject matter if the source copy was legally obtained.” However, this will not apply to an “audio-recording medium” such as CDRs and Mini-Disc. It does, however, permit a consumer to copy a song purchased from iTunes from his or her computer to his or her iPod.[45]
Third, s. 29.23 allows an individual to make a fixation of a communication signal or reproduce a work, sound recording or performance being broadcast for the purpose of privately viewing the work at a later time, provided that the signal is received legally, only one recording is made, it is used for private purposes, and is not given away. For example, an individual would record a show on his or her PVR to watch at a later time. This exception does not apply to works or sound recordings accessed through an on-demand service, or to works protected by digital locks.[46]
Finally, s. 29.24 permits copies of works to be made for backup purposes, in cases where the legally obtained source copy is lost, damaged or otherwise rendered unusable. This exception does not apply to works protected by “digital locks” (which this article will discuss in more detail later on), and the backup copy may not be given away.
To determine whether the defense of fair dealing is available to a user, the courts employ a two-stage analysis. First, the user must prove that the use allegedly infringing copyright qualifies as one of the enumerated dealings listed above. These approved dealings are limited to non-commercial copying for the purposes of research or private study, criticism, review, and news reporting.
If the action proceeds to the second stage, the user must prove that the dealing itself was fair. At this stage, proportionality is important in considering if use of a work might be considered fair dealing. In CCH Canadian Ltd. v. Law Society of Upper Canada,[47] the SCC established the following criteria for evaluating whether a dealing is fair:
(a) The purpose of the dealing
At this stage, courts adopt an objective test to assess the user’s real purpose or motive in using the copyrighted work.[48] Although the commercial nature of the dealing is an important consideration, the court in CCH affirmed that a fair dealing is “not limited to non-commercial or private contexts.”[49]
(b) The character of the dealing
In assessing the character of a dealing, courts examine how the works were dealt with.[50] If multiple copies of works are being widely distributed, this will tend to be unfair. [51] If, however, a single copy of a work is used for a specific legitimate purpose, and was destroyed after it was used, then it may be easier to conclude that it was a fair dealing.[52] It should also be noted that the Court in CCH suggested that custom or practice in the industry can be used to assess fairness.[53]
(c) The amount of the dealing
The court in CCH noted that if the copying extends beyond a very small amount, the amount copied will depend on the context: “…the quantity of the work taken will not be determinative of fairness, but it can help in the determination. It may be possible to deal fairly with a whole work.”[54]
In certain circumstances, as in the case of using photographs or academic articles, the court recognized that it may be impossible to deal fairly with the work without copying the entire work.[55]
Furthermore, in Society of Composers, Authors and Music Publishers of Canada v. Bell Canada, the Supreme Court confirmed that the “amount of the dealing factor should…be assessed by looking at how each dealing occurs on an individual level, not on the aggregate use.”[56] For example, if the alleged infringer is a journal archive, the court would look at the dealings as they relate to the specific works requested by the users, and not by the total number of users or pages requested.
(d) The nature of the work
According to the court in CCH, “if a work has not been published, the dealing may be more fair in that its reproduction with acknowledgement could lead to a wider public dissemination of the work.”[57]
(e) The effect of the dealing on the work
If the work in question competes for the market of the original work, it is less likely that the dealing will be found to be fair.[58] The court in CCH suggested that actual evidence of economic harm must be produced in order to demonstrate a negative effect:
Another consideration is that no evidence was tendered to show that the market for the publishers' works had decreased as a result of these copies having been made. Although the burden of proving fair dealing lies with the Law Society, it lacked access to evidence about the effect of the dealing on the publishers' markets.[59]
(f) Available alternatives to the dealing
In CCH, the Court noted that:
Alternatives to dealing with the infringed work may affect the determination of fairness. If there is a non-copyrighted equivalent of the work that could have been used instead of the copyrighted work, this should be considered by the court.[60]
Note that no single factor is determinative of whether or not a dealing is fair, nor is the list of factors exhaustive.[61] Several recent decisions have affirmed this notion,[62], [63] and they have also discussed how parties can apply the enumerated factors. For example, in Canadian Copyright Licensing Agency (Access Copyright) v British Columbia (Education), the court noted that, in considering the amount of the dealing, parties can present qualitative or quantitative evidence, and that either can be influential.[64] The case also specified that, in discussing the character of the dealing, parties can draw on evidence of how the works are used, rather than just using evidence of the aggregate volume of the copying done.[65]
Interestingly, this case and Access Copyright v Canada considered how the enumerated factors come together. The court in BC (Education) rejected Access’ argument that the fair dealing factors need to be considered interdependently to create the overall impression of fair dealing mandated by CCH and Access.[66] In addition to making this same comment, the court in Access Copyright v Canada also notes, “To some extent the factors must be considered in isolation in order to prevent conflation and double counting.”[67]
Note also that the fair dealing exceptions to copyright infringement have an important modern implication: they limit protections for copyright infringement when copyrighted material is obtained by circumventing technological locks, or technological protection measures (TPMs). TPMs, which are any means of digitally protecting access to or use of copyrighted material (e.g., password protection, encryption, etc.), are forbidden by s. 41 of the Copyright Act.[68] As the TPM provisions begin to enter the case law (because methods for circumventing them are on the rise), they interact with fair dealing in an interesting way. Obtaining copyrighted material by circumventing TPMs is illegal, and courts are forced to discuss whether the fair dealing exceptions to copyright infringement apply when copyrighted material is obtained illegally. In a 2015 case, for example, the small claims court of Ontario decided that the defence of fair dealing is unavailable to those who have obtained copyrighted material illegally, and therefore it is unavailable to those who have obtained it by circumventing TPMs.[69]
Notably, these provisions highlight that there is still a fine balance in Canada between users’ rights and copyright protection. The preamble of the Act states that these TPM rules exist because “the Government of Canada is committed to enhancing the protection of copyright works or other subject-matter, including through the recognition of TPMs, in a manner that promotes culture and innovation, competition, and investment in the Canadian economy.”[70] However, as Michael A. Gunn notes, “Despite the utilitarian purpose of copyright law, there are no utilitarian aspects of TPM. In fact, TPM limits the creative potential of individuals through artificial exclusion mechanisms that prohibit access to information and prevent the exploitation of exceptions to copyright infringement.”[71]
Fair Use
In the U.S., the principle of fair use is entrenched in s. 107 of the U.S. Copyright Code, which reads:
107. Fair use of a copyrighted work, including such use by reproduction in copies or phone or records or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include:
the purpose and character of the use, including whether such use is of a commercial nature or is for non-profit educational purposes;
the nature of the copyrighted work;
the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and,
the effect of the use upon the potential market for or value of the copyrighted work.[72]
As in Canada, the courts employ a two-stage analysis to determine whether a use of a copyrighted work is fair. However, under the U.S. system, the list of qualifying categories or purposes in the first stage of the analysis is illustrative rather than exhaustive. In other words, the statute identifies purposes that may qualify as fair use, but acknowledges that the courts may add new purposes as they see fit.
At the second stage of the analysis, the U.S. model contains four statutorily entrenched factors which the court may draw upon to determine whether a use is fair:
(1) The purpose and character of the use
For this factor, courts consider whether the use of the work is commercial or transformative.[73] At present, the courts have not found that a commercial use creates a presumption against fair use, but such use does tend to weigh in favour of the plaintiff.[74]
(2) The nature of the copyrighted work
For this factor, courts consider whether the work is factual or fictional and whether it is published or unpublished. If there is substantial creativity, this tends to favour the owner.[75]
It should be noted that Canadian courts have interpreted this factor to favour users who disseminate unpublished works, whereas the U.S. Supreme Court in Harper & Row Publishers v. Nation Enterprises found that authors have the right to control the first appearance of their work as part of the right of first publication.[76] This difference in interpretation reflects Canada’s user-centric approach to fair dealing.
(3) The amount and substantiality of the portion used in relation to the copyrighted work as a whole
For this factor, courts consider the quality of the use, rather than the quantity. [77] When courts find the character of the use to be fair, the use of the entirety of the work may be deemed fair use.[78]
(4) The effect of the use upon the potential market for or value of the copyrighted work
The court in Harper & Row signaled this factor as the most important in determining fair use, particularly if the use of the copyrighted work becomes widespread and undermines the author’s potential market for the copyrighted work.[79]
By contrast, the principle of “market substitution” is less important in Canada, where, according to CCH, the plaintiff bears the onus of proving subversion of the owner’s market by the defendant.[80]
Comparative Assessment
As mentioned, under the American fair use system, the list of qualifying categories or purposes in the first stage of the analysis is illustrative, rather than exhaustive. The substance of the fair use analysis, therefore, lies not in determining whether the use qualifies as a valid purpose, but rather in determining whether the particular use is fair. As such, the U.S. system has considerable flexibility, opening the door for innovative uses of copyrighted works that may not have been contemplated at the time the legislation was drafted.
In Canada, by contrast, the “exhaustive” list of lawful uses in the first stage of the analysis provides a more restrictive approach by design. However, the broad and flexible interpretation given to the enumerated categories by the Supreme Court of Canada in leading cases, especially after the passing of Bill C-11, have effectively aligned the fair dealing system with the American fair use model. (These case law developments will be summarized in the final sections of this article.)
To round out this comparative analysis, it is worth returning to the earlier discussion of TPMs and fair dealing. The availability of the fair dealing and fair use defences in Canada and the United States, respectively, is affected by the way that anti-circumvention previsions are drafted in each country’s copyright legislation. As Teresa Scassa notes,
In the United States, courts have interpreted the anti-circumvention provisions with a bit more nuance, perhaps because of the wording of the statute, which expressly addresses concerns over fair use by providing that “Nothing in this section shall affect rights, remedies, limitations, or defenses to copyright infringement, including fair use, under this title.” This is interesting because it suggests that the fact that at TPM has been circumvented would not factor into a fair use analysis. By contrast, in Canada, it might well be that a court would consider the circumvention of a TPM to militate against a finding of fair dealing.[81]
Check out parts 1 and 3 of this copyright comparison series
Part 1 - Introduction and Derivative Works in Canada and the U.S.
FOr more information, or for help from CArson Law and our IP Division
References
[42] Myra J Tawfik, “The Supreme Court of Canada and the ‘Fair Dealing Trilogy’: Elaborating a Doctrine of User Rights Under Canadian Copyright Law” (2013) 51:1 Alta L Rev 191 at 196. [43] Bill C-11: The Copyright Modernization Act, 2012, online: The University of British Columbia: http://copyright.ubc.ca/copyright-legislation/bill-c-11-the-copyright-modernization-act. [44] Supra, note 1. [45] Supra, note 1. [46] Ibid. [47] CCH Canadian Ltd v Law Society of Upper Canada, 2004 SCC 13 [CCH]. [48] Supra, note 7 at 320. [49] Supra, note 47 at para 51. [50] Supra, note 7 at 321. [51] Ibid. [52] Ibid. [53] Supra, note 47 at para 55. [54] Ibid., at para 56. [55] Ibid. [56] Supra, note 3 at para 41. [57] Supra, note 47 at para 59. [58] Ibid. [59] Ibid., at para 72. [60] Ibid., at para 57. [61] Ibid., at para 60. [62] Canadian Copyright Licensing Agency (Access Copyright) v British Columbia (Education), 2017 FCA 16 [BC (Education)] at para 46. [63] Canadian Copyright Licensing Agency (Access Copyright) v Canada, 2018 FCA 58 [Access Copyright v Canada]. [64] Supra, note 61 at para 82. [65] Ibid., at para 91-3. [66] Ibid., at para 76-7, 79. [67] Supra, note 62 at para 141, 137. [68] Supra, note 1 at § 41, 41.1. [69] 1395804 Ontario Inc Ltd (Blacklock’s Reporter) v Canadian Vintners Association, 2015 CanLII 65885 (ON SCSM) at para 54. [70] Supra, note 1. [71] Michael A. Gunn, “Peer-to-Peer File Sharing as User Rights Activism” (2015) 5:3 Western Journal of Legal Studies at 11. [72] Supra, note 9. [73] Supra, note 7 at 345. [74] Ibid., at 346. [75] Ibid., at 347. [76] Harper & Row v. Nation Enterprises [1985] 471 U.S. 539 at 562 [Harper & Row] (quoted in D’Agostino); Supra, note 7 at 347. [77] Supra, note 7 at 348. [78] Ibid. [79] Supra, note 76. [80] Supra, note 7 at 349. [81] Teresa Scassa, “Information Law in the Platform Economy: Ownership, Control, and Rescue of Platform Data” in Derek McKee, Finn Makela & Teresa Scassa, eds, Law and the Sharing Economy: Regulating Online Market Platforms (Ottawa: UOP, 2018) 149 at 176.
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