Let's Try This Again: Canadian Government Tables Bill C-11 (Copyright Modernization Act)

Posted on September 30, 2011 by Bob Tarantino

On September 29, 2011, the Canadian government tabled Bill C-11 (the Copyright Modernization Act), which is effectively a re-introduction of Bill C-32 which died with the dissolution of Parliament in March 2011 ahead of the federal election in May 2011.  As with Bill C-32, we're going to do our best here at the Signal to offer coverage of the debates and progress surrounding this new effort at copyright reform.  (Our coverage of Bill C-32 is archived here.)

Already, as expected, Bill C-32 has prompted a torrent (get it?) of commentary and information.  Some of the more notable:

For what's it's worth, my own views of Bill C-11 remain remarkably like my views of Bill C-32: there is much which is worthwhile in the bill, and there are elements which deserve modification.  On the larger issue of how Canada tackles copyright reform, I think I covered it in an op-ed which was published in the January 24, 2011 edition of the Hill Times, which I reproduce here (you'll have to excuse the painfully ungainly last sentence):

Copyright is contentious, in some cases intractably so, but the way in which we approach copyright reform is making matters worse.

As Sara Bannerman notes in her essay in From "Radical Extremism" to "Balanced Copyright": Canadian Copyright and the Digital Agenda, edited by Michael Geist, in 1923 copyright was referred to as “the most controversial subject that has ever been before the Parliament of Canada” – so the fact that that copyright reform generates heated, sometimes vicious, rhetoric is nothing new. Unfortunately, the methods we use to reform copyright are likewise not new, and so a cycle of failed efforts at reform perpetuates itself. Bill C-32 (The Copyright Modernization Act), currently before legislative committee, represents the third attempt in the last ten years to achieve comprehensive reform – and that is precisely the problem.

Recent copyright reform efforts, like Bill C-60, Bill C-61 and particularly the current Bill C-32, read as if they are striving to solve every conceivable copyright concern in one fell swoop. To nobody’s surprise, they fail to achieve that goal. Bill C-32 covers at least thirteen different major aspects of the copyright regime – from photography to internet service provider liability to so-called “format shifting” – any one of which is fertile enough ground for virtually ceaseless lobbying, debate and fine-tuning. Other than the fact that they all fall under the general heading of “copyright”, there is little which binds the various matter together. Copyright, and those Canadians who are affected by it, would be far better served if Parliament avoided efforts at omnibus legislative reform and opted instead for piece-meal “fixes” of discrete problems.

As an example, why should updating our legislation to allow for the ability to record and watch a television program without the prospect of incurring liability for copyright infringement (something which has been an issue since the advent of the VCR a generation ago) be contingent on also revising the scope of various educational institution exceptions? It would of course be wonderful if we could “solve” all the outstanding copyright problems at once, but yoking multiple individual problems together, particularly the much-more controversial with the much-less controversial, merely jeopardizes any advancement on any front. Issues on which there is relatively broad consensus (such as format- and time-shifting) get packaged with issues which seem set to dissolve into wars of attrition (such as technological protection measures or “digital locks”).

And, of course, the comprehensive reform approach virtually inevitably overlooks a few issues of concern. The matter of Crown copyright remains unaddressed by Bill C-32, as does the open question of the identity of the “author” of a motion picture. These may be minor affairs in the grand sweep of the copyright debate, but the adoption of a “once per decade” approach to copyright reform means that live issues overlooked now will not be addressed for many years. Brute political calculus rules the copyright reform agenda – instead of legislating to get efficient and practical reforms, we get legislation which seeks to give just enough marginal benefit to every possible stakeholder that they are willing to overlook the negative aspects of other parts of the bill.

Omnibus legislation poses at least two dangers. First, given a surplus of information and deficits of time and attention, not all elements of the legislation may receive the scrutiny which is warranted, allowing unanticipated problems or infelicities of drafting to “sneak through”; second, good elements can be outweighed or “crowded out” because of bad elements. Positive amendments may be lost because the negative amendments are so deleterious that we cannot in good conscience pass the legislation simply in order to obtain the good parts.

We would be better served by discrete, targeted amendments to the Copyright Act, introduced in a timely fashion and which can each be assessed on their own merits. Repeated failed attempts at omnibus amendments serve the interests of few, except lobbyists and lawyers. Just as the music industry has seen fit to “unbundle” its offerings, moving from selling entire albums to individual tracks, so too should copyright reform be approached in a way which allows for incremental improvements.Otherwise we remain the unwitting victims of an “all or nothing” approach which serves the interests of none.

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A Terms of Trade Primer - Part 8 (Producer Fees/Overhead, Tax Credits, Audit Rights)

Posted on September 21, 2011 by Bob Tarantino

This is the eight (and final) installment in our series about the new Terms of Trade applicable to the English-language Canadian private broadcasting industry (Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7).  This installment focuses on Section 9 (Producer Fees and Overhead), Section 10 (Retention of Producer Tax Credits) and Section 11 (Audit Rights)  of the Terms of Trade Agreement.  Archived versions of all eight posts in this series are available at this link.

What do the Terms of Trade say about... producer fees and overhead?

Producer fees and overhead "will be industry standard, as accepted by Canada Revenue Agency".  CRA policy (as set out in Application Policy FAS 2009-01) with respect to fees and overhead paid to "incumbent" producers (e.g., those with an ownership interest in the production company) is that fees in the amount "of 10% of the total actual costs in parts B and C of the standardized production budget" are "generally considered reasonable".  As the CRA document goes on to point out, that threshold amount "is not intended as a 'cap' or 'maximum allowable'. When justified and supported by the facts of the particular case, amounts greater than the reference threshold may be considered reasonable."  (For further information, see this Heenan Blaikie LLP publication on the topic from 2008.)

Producer fees/overhead cannot be deferred or invested.  This, along with Section 10 (to be discussed momentarily) is one of the more interventionist elements of the Terms of Trade.  Producers routinely defer or "re-invest" their fees (whether a portion or the entirety) in order to facilitate production - a flat prohibition on such activity seems designed to spur broadcasters to increase their license fees in order to "close the gap".  Whether the provision will in fact have that result remains to be seen.

What do the Terms of Trade say about... retention of producer tax credits?

Only a maximum of 75% of eligible tax credits may be invested in a project.  Similar to the discussion regarding producer fees/overhead, above, this provision seems to run counter to long-accepted practice in the industry.  Presumably the motivation for this provision is to attempt to ensure that as much money as possible (in this case, the 25% of "non-investable" tax credits) actually reaches the pocket of independent producers, rather than being "soaked up" by the budgetary needs of the production.  While a laudable goal, and completely consistent with the mandate of the CMPA, it raises the question of how this would be enforced: if a broadcaster does not increase their license fee by an amount equal to the 25% of the tax credits which the producer is prevented from "investing" in the budget, would that constitute a breach of the Terms of Trade agreement? To what extent would individual producers be supportive of any action to enforce this particular provision of the Terms of Trade?

What do the Terms of Trade say about... audit rights?

If a producer or broadcaster has an entitlement to a revenue stream, they are entitled to "industry standard audit rights" which include the right to recoup reasonable audit fees if the audit reveals an unpaid amount which is in excess of 5% of the total amount owed and worth more than $1,000.  It remains to be seen what constitutes "industry standard" beyond the circumscribed right to recoup audit costs - for example, audit clauses usually contain restrictions on the number of times per year an audit can be conducted and the number of months or years within which a particular statement must be audited.  It is curious that such matters were not dealt with in the Terms of Trade agreement, but the right to recoup audit costs is itself an often-contested contractual right which producers will undoubtedly be pleased to be entitled to.

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You're Getting Sued for What? An E&O Odyssey (Pt 2)

Posted on September 16, 2011 by Bob Tarantino

This post is one in an occasional series highlighting the type of risks which film and TV producers face and which are supposed to be covered by E&O insurance, and which aims to demonstrate that what might seem to a producer to be paranoia on the part of their lawyer is, in fact, well-founded.  These posts will point to actual lawsuits which have been filed against film/TV producers for various alleged rights infringements (whether copyright, trade-mark, right of publicity, or otherwise) - and which inform the nit-picking approach taken by producer's counsel.

THR, Esq. reports that the US-based Travel Channel is the defendant in a class action lawsuit filed by a representative plaintiff on behalf of individuals who appeared on the show Extreme Fast Food (Travel Channel Faces Class Action Lawsuit Over Filming Woman at Hot Dog Stand).  The plaintiff alleges that she was filmed without consent while eating at a famed hot dog joint in Chicago.

In a fortuitous coincidence, Mark Litwak has a post (which includes sample wording) on the use of "crowd releases", being the posting of signs warning pedestrians or attendees of a particular location that they are being filmed.  As I noted in PIPEDA and Filming/Photographing Individuals for Film and TV Projects:

It is generally accepted practice among entertainment lawyers that a signed release authorizing the reproduction of a person’s image is required for each individual who appears identifiably on-screen in an audio-visual project. There are some widely-recognized limited exceptions to that general rule, such as the placement of prominently-displayed notices in “public” or general access locations alerting pedestrians or attendees that filming is taking place and that entering into the area or venue will be deemed to be authorization for the filming and reproduction of their image.

To my knowledge, no Canadian court has ever pronounced on the effectiveness of a "crowd release".

 

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Parody and Fair Dealing As It Is and May Be

Posted on September 16, 2011 by Bob Tarantino

The federal government has announced that it will be re-introducing Bill C-32 (The Copyright Modernization Act), which would have added "parody" as a category of fair dealing under the Copyright Act (Canada).  In addition, the Supreme Court of Canada is set to hear at least five copyright cases before the end of 2011 - an unprecedented occurrence; and of those five cases, at least two will address fair dealing.

But what of parody as fair dealing under existing law?  Emir Aly Crowne Mohammed has written an immensely useful paper which addresses the topic: "Parody as Fair Dealing in Canada: A Guide for Lawyers and Judges" (Journal of Intellectual Property Law & Practice (Oxford), Vol. 4, No. 7, 2009).  Other sources worth perusing are Graham Reynolds' "Necessarily Critical? The Adoption of a Parody Defence to Copyright Infringement in Canada", Giuseppina D'Agostino's "Healing Fair Dealing - A Comparative Copyright Analysis of Canada's Fair Dealing to U.K. Fair Dealing and U.S. Fair Use",and Carys Craig's "The Changing Face of Fair Dealing in Canadian Copyright Law: A Proposal for Legislative Reform".

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Upccoming Speaking Engagements

Posted on September 13, 2011 by Bob Tarantino

Fall 2011 is set to be a busy one for speaking engagements featuring members of the Heenan Blaikie LLP Entertainment Law Group:

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TIFF 2011 Heenan Blaikie / E&Y State of the Industry

Posted on September 12, 2011 by Bob Tarantino

 

On September 12, 2011, Heenan Blaikie, along with Ernst & Young hosted the 5th annual State of the Industry discussion for media and entertainment executives who were in town for the Toronto International Film Festival. Moderated by Steven Gaydos, Executive Editor of Variety Magazine, panellists included Tom Bernard, Co-President and co-founder of Sony PicturesClassics; David Glasser, Chief Operating Officer of the Weinstein Company; Rachael Horovitz, Producer of Moneyball and Grey Gardens; Victor Loewy, Chief Executive Officer of Alliance Films; and Martin Moszkowicz, Chief Executive Officer of Constantin Film.

In addition to the panel discussion, the audience of 165 were asked to provide their input to the discussion through real-time polling.

1. Film was universally seen as the art form of the 20th century. Is film still seen that way in the 21st century?

Yes - 46%

No – 54%

This year, the discussion focused on what financial and creative changes have occurred within the film industry in the past decade. One of the main concerns, especially with the amount of “blockbuster” movies that at times seem to have more style than substance, was whether filmmaking is still considered an "art form". Responding to the question by Gaydos as to whether making "interesting" films is still a priority, Glasser responded that audiences are showing enthusiasm for both mainstream and independent films.

2. What is the most important element in controlling costs / financing a film?

Smarter compensation packages for stars and directors – 54%

Private Investment – 6%

Film funds – public – 4%

Co-producing with others – 35%

In relation to the business side of filmmaking, the panelists agreed that while despite the advent of technology and the audience’s growing appreciation for both mainstream and independent films, the struggle to get a film made is just as difficult as it was a decade ago. In addition, Horovitz, who produced the hit Moneyball, said that now cable system operators have almost as much say as to how a film is "labeled" as the film companies who work with independent producers. For independent producers who are looking to pair up with film companies who are making less films and spending less money on development than they did ten years ago, Horovitz warned that though current development deals look promising, that they could potentially lessen the creative control they have over their present films and future projects.

3. What’s currently the most important marketing tool?

Social Media – 51%

Festivals – 7%

Online Distribution – 9%

Print and Advertising – 33%

With the surge of popularity in using social media to promote films, studios are obviously finding that it is beneficial and reaching the desired target audiences, but they are not necessarily saving that much money, as premiering film trailers on television is still the preferred way of reaching out to mainstream audiences.

4. How large is a threat is piracy to film?

Piracy is a minor threat to the state of films – 11%

Piracy should be a concern and needs to be monitored – 9%

Piracy is a huge threat to film and something needs to be done immediately – 80%

Because of the threat of piracy, online advertising, while beneficial, is problematic. Moszkowicz recounted a story about a scene from a 2005 movie that was downloaded on YouTube 2.4 million times, but the film company did not receive any revenue until the production company negotiated a small royalty fee for each viewing the trailer received.

As for the future? According to the panelists, it depends on how well film companies adapt to the continuous developments in technology and audience demands. DVD sales are dwindling, as movie rental franchises, such as Blockbuster have shut their doors and there is an expectation that sales will continue to head south. While downloading films has become more popular, large franchises, such as Walmart and Target are being more discerning as to what physical copies of films they want to sell. The panel agreed that as long as international sales remain high, and more importantly, films with well-known actors and films that appeal to the general market are still being produced, everyone will be able to adjust to the changes that are guaranteed to come over the next ten years.

 

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Baglow v Smith - The Increasing Importance of Context in Defamation Claims

Posted on September 12, 2011 by Bob Tarantino

The recent decision of the Ontario Superior Court of Justice in Baglow v. Smith (2011 ONSC 5131) is notable for observers of Canadian defamation law because it demonstrates the continued advance of the tendency of courts to take full account of the context in which allegedly defamatory comments are made.  At the risk of over-simplifying the matter, the court's decision can be summarized as this: there is something meaningfully different about online statements, particularly those which are made on political blogs and discussion forums, which militates that they be treated differently for purposes of defamation law.  Put somewhat differently (and, again, with the qualification that this over-simplifies matters): impugning someone's name on the broadcast evening news is different from impugning their name on a blog.

Omar Ha-Redeye has posted a lengthy and detailed discussion of the case over at slaw (Online Defamation on Political Blogs in Baglow v. Smith), and Matthew Nied has likewise put up a thoughtful post on his own blog which is well worth reading (Baglow v. Smith: Removing the Defamatory Sting From Online Debates on Blogs and Message Boards).  The basic factual elements of the case are concisely explained by Nied as follows:

The plaintiff claimed that the defendants defamed him by making statements that exceeded the boundaries of their normally acrimonious political debate on the internet. The plaintiff complained that the defendants defamed him by branding him “one of the Taliban’s more vocal supporters” on an internet message board. The words complained of referred back to an ongoing discussion, largely on the plaintiff’s blog, where the parties had debated the validity of the trial of Omar Khadr. The parties had aggressively berated each other, and often employed colourful derogatory characterizations. Although the plaintiff had the opportunity to respond to the impugned statements on the internet message board, he did not do so. The defendants brought a summary judgment motion to dismiss the action on the basis that the statements were not defamatory or, alternatively, that the defence of fair comment applied.

(In the interests of full disclosure I should note that I am an online acquaintance of the plaintiff, having corresponded with him on a variety of topics over the years.)

The court dismissed the action, primarily on the basis of a (somewhat convoluted) determination that the statement was not capable of a defamatory meaning (i.e., "not capable of damaging the reputation of the plaintiff" [para. 58]) - but, significantly, the court also stated that "another contextual factor ... would further bolster this conclusion, namely that the alleged defamatory words were made in the context of an ongoing blogging thread over the Internet".  While some have characterized the decision of Mr. Justice Annis in Baglow v Smith as consisting of a ratio (not defamatory) and obiter (took place in the context of an ongoing internet argument), I think the preferable reading is that both of the stated grounds for dismissing the action are part of the same analysis: the words are not defamatory precisely because they were uttered in the context of an online argument.

The reasoning in Baglow v Smith spends a significant amount of time attempting to describe/understand the milieu of online political blogging:

[64] More importantly to the issue of context, the blogging audience is expecting and would indeed want to hear a rejoinder of this nature where the parry and thrust of the debaters is appreciated as much as the substance of what they say.

[65] In essence, I am suggesting that the Court, in construing alleged defamatory words in an ongoing debate, should determine whether the context of the comment from the perspective of the reasonable reader or listener is one that anticipates a rejoinder, which would eliminate the possible consequence of a statement lowering the reputation of the plaintiff in their eyes.

[66] To some extent the Court is attempting to decide whether the debate should have gone forward, such that walking off the blogging stage, so to speak, is a form of “gotcha” contrary to the rules governing the debate.

[67]  I realize that this sounds like a form of defence of mitigation of a defamatory comment. But I see it more as an uncompleted comment, something akin to a plaintiff arguing that he or she has been defamed by a question, when the response was what the audience was expecting.

... [70] Bringing an action on the comment in mid-debate runs contrary to the rules and has the effect of chilling discussion. If allowed, it places the opposing party in a defensive mode, rather than an offensive one, strategically putting that party at a disadvantage.

The court's approach in this regard is entirely consistent with the Supreme Court of Canada's decision in WIC Radio Ltd. v. Simpson (2008 SCC 40) and, latterly, with the approach described and argued in favour of in my recent article on defamation law (Chasing Reputation: The Argument
for Differential Treatment of “Public Figures” in Canadian Defamation Law (48 OHLJ 595)). 

Whether the decision is ultimately upheld (it has apparently been appealed), much like the question of whether it is the correct one (as Nied notes, the impugned statement was made on a message board which was an entirely different forum than where much of the earlier argument had taken place, though erring of the side of fluidity in the online environment is probably the preferable approach), is, I think less important than the disposition that it reveals on the part of the court.  Here we have a court which is struggling to reconcile a strict liability tort with a highly malleable, almost entirely interactive technological venue.  The court's analogizing of the online argument to an in-person debate is, it seems to me, quite appropriate, and at least as practical a lens for analyzing the matter as any other.  Defamation law will only continue to be consistent with our evolving conceptions of reputation, and with expectations regarding free expression rights, if context continues to play an increasing role in the assessment of defamation actions.

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A Terms of Trade Primer - Part 7 (Super-License Fees)

Posted on September 9, 2011 by Bob Tarantino

This is the seventh installment in our series about the new Terms of Trade applicable to the English-language Canadian private broadcasting industry (Part 1, Part 2, Part 3, Part 4, Part 5, Part 6).  This installment focuses on Section 8 (Super License Fees)  of the Terms of Trade Agreement.  This is the seventh of an anticipated eight posts which will be posted over the course of the next little while and which will cover the Terms of Trade in detail.  Once all eight posts have been published, the archived posts will be available at this link.

What do the Terms of Trade say about... "super-license fees"?

A super-license fee is equal to the lesser of (a) the combined CMF threshold license fee for the applicable genre (if any) plus the maximum license fee top-up for that genre, or (b) a license fee representing at least 60% of the production budget of a project.  Once a super-license fee has been paid, it significantly expands the scope of the rights which a broadcaster can acquire and/or increases the share of revenue they would otherwise be able to obtain from certain forms of exploitation.

The payment of a super-license fee entitles the broadcaster to enter into negotiations for a higher revenue share of certain rights - but the broadcaster's share of revenue can never exceed 75%.  The rights in respect of which the broadcaster can obtain a higher share of revenue are the following:

  • transaction-based non-linear on-demand exhibition on all platforms (ie where the customer has only temporary access to content, as opposed to a permanent copy)
  • electronic sell-through or download-to-own platforms
  • in-flight
  • DVD/home video
  • producer-created revenue-generating original digital content
  • non-promotional games*
  • merchandising*

With respect to the foregoing forms of exploitation, then, the payment of a super-license fee effectively opens a window for the broadcaster, allowing them to increase their participation rate from 50% to a maximum of 75%.  As noted in Part 5, the forms of exploitation listed above are not automatically included within the scope of a broadcaster's rights - they have to negotiate for them.  In other words, the broadcaster would first have to negotiate to obtain the rights at all (at a 50/50 split), and then, if they pay a super-license fee, they could negotiate to increase their share of the revenue to a maximum of 75%.  It should be noted that two of the forms of exploitation noted above with an asterisk (non-promotional games and merchandising) are normally reserved exclusively to the producer, but payment of a super-license fee moves those items from the reserved list to the list of items in which the broadcaster can participate.

The payment of a super-license fee entitles the broadcaster to enter into negotiations for a share of profit participation in forms of exploitation which are otherwise exclusively reserved to the producer.
 As set out in Part 5, some types of exploitation are normally reserved to the producer and the broadcaster is prohibited from having any share of revenues - but upon payment of super-license fee, two things happen: first, as described above, non-promotional games and merchandising move from the "reserved" list to the "participating" list (whereby a broadcaster gets a share of revenue); second, everything that remains on the "reserved" list becomes open to a restricted form of profit participation for the broadcaster - the rights in question are:

  • French-language (Canada)
  • other languages (Canada)
  • format
  • theatrical
  • music publishing
  • retransmission rights
  • sub-licensing and distribution
  • book and e-book publishing

However, even though the broadcaster is permitted to participate in these revenues, their participation is capped by a formula: no greater than 1.5x the dollar investment of the broadcaster, expressed as a percentage of the budget, that is over and above the amounts listed in the definition of "super-license fee" (ie 60% of the total budget or the CMF threshold license fee plus the maximum license fee top-up), up to a maximum of 30%.

If the broadcaster does negotiate profit participation, it's profit participation is triggered only once all equity investors in the project (including any tax credit investment by the producer) have recouped their investments.

The super-license fee mechanism is therefore a means by which certain rights allocation matters can be altered - which, although complicated, seems like a relatively workable device for incentivizing higher payments by broadcasters while still reserving to producers the bulk of the benefit of ancillary exploitations.

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You're Getting Sued for What? An E&O Odyssey (Pt 1)

Posted on September 8, 2011 by Bob Tarantino

As has been mentioned on this blog numerous times, the "clearance" process for obtaining "errors and omissions" (E&O) insurance for film and TV projects can sometimes be an arduous, frustrating process for both producers and their lawyers.  Producers are often frustrated by the seemingly arbitrary or heavy-handed decisions made by their lawyers to cut, obscure or otherwise modify materials appearing on-screen which the lawyer fears could run afoul of the E&O policy's clearance guidelines which stipulate that no copyrighted or trade-marked materials can appear on-screen without some kind of written permission.  This post is the first in an occasional series which aims to demonstrate that what might seem to a producer to be paranoia on the part of their lawyer is, in fact, well-founded (even paranoids have enemies, goes the saying).  These posts will point to actual lawsuits which have been filed against film/TV producers for copyright or trade-mark infringement - and which inform the nit-picking approach taken by producer's counsel.

As first reported by Eriq Gardner at THR, Esq., the producers of the MTV show "The Real World" have been sued for failing to blur out video images of "shadow dancers" who were visible in the background of scenes filmed in bars/clubs in New Orleans and broadcast in two different episodes of "The Real World" ('The Real World' Sued for Failing to Blur 'Shadow Dancers').  For anyone who is unclear on what a "shadow dancer" is, the official Shadow Dancers website should provide all the clarification which is required.  A copy of the complaint filed in US federal court is available here.

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Reclaiming Old Masters ("Old Masters" as in Records, Not Paintings)

Posted on September 7, 2011 by Bob Tarantino

A number of news outlets have recently reported on the flood of litigation which is expected to arise in the United States as a result of recording artists seeking to terminate and reclaim ownership of their sound recordings issued in 1978 and in subsequent years (New York Times:  Record Industry Braces for Artists’ Battles Over Song Rights; Rolling Stone: Record Biz Braces for Legal Battles Over Copyright Law). 

Steve Gordon, over at the Entertainment, Arts & Sports Law Blog, has written The Comprehensive Guide to Reclaiming Old Masters, which rather elegantly sets out the relevant legal analysis under the US Copyright Act.  Gordon highlights two significant issues which will need to be addressed, the latter of which I had not seen previously raised: first, are the sound recordings "works made for hire" and, second, are the artists the only relevant "authors" of the sound recordings, or could producers be considered to be authors (and hence entitled to a reversionary interest) as well?  In any event, it appears that the US music industry is in for a few years of "interesting times" (to borrow from the purported Chinese curse) - as the clock ticks down to the dates on which some of the most commercially successful sound recordings of the last fifty years start to become eligible for "reclamation" by artists and performers.

So - do any similar concerns arise under Canadian copyright law?  The short answer is "not really", at least not in the same way that it is happening under US law - but Canadian copyright law does have a "reversionary interest" which will one day pose similar problems to current owners of some types of copyrighted materials.

Section 14 of the Copyright Act (Canada) provides that, 25 years after an author dies, the copyright in any works which the author created and for which the author was the first owner of copyright (so, basically, excluding works created "in the course of employment") automatically reverts back to the estate of the author.  So, for example, if Bill Smith writes a novel, then enters into an agreement with a book publisher for that novel which grants the publisher the exclusive right to distribute the book, and then Bill dies, 25 years after Bill dies, the rights in the novel revert back to Bill's estate, irrespective of the publishing contract Bill signed or anything which might be contained in it.  Thus, copyright owners should be vigilant about any works they own/control whose author is deceased - the author's estate could pop up out and assert their rights.

Does Section 14 of the Copyright Act (Canada) apply to sound recordings?  It does not appear to, since Section 14 only applies to "works", and "sound recordings" are technically not "works", but a separate subject-matter of copyright protection found in Section 18 of the Act.  The "maker" of a sound recording is the owner of copyright in that sound recording, and so the ownership of Canadian record labels in sound recordings for which they were the "maker" seems more secure than their US counterparts (setting aside for the moment the convoluted analysis which would be required for sound recordings created prior to the current iteration of the "sound recording" regime found in the Act).  All that being said, Section 14 would certainly apply to musical compositions, and so any publishing or licensing arrangements entered into in respect of a musical composition would be subject to the reversionary interest.

Is any of this a good idea?  As I argued in this article published earlier this year, I don't think so:

For copyright exploiters, the existence of the reversionary clause poses a troubling challenge: the security of their tenure as owner is subject to the reversionary interest of the author's estate. For creators, the clause wreaks a counter-intuitive result: given the uncertainty in their ownership and the possibility that they may be excluded from the last twenty-five years of the copyright term, exploiters will be inclined to discount the value they are prepared to pay for a work.

Exploiters may also, given the tenuous nature of their ownership interest, be disinclined to invest resources toward the exploitation of works nearing the reversionary threshold, since they will be unsure whether an author's estate will "pop up" and assert an ownership claim. The doubtful status of ownership of the work is compounded by the fact that so few authors and estates are even aware of the existence of the reversionary interest-leaving assertions of an estate's rights to those who are well-advised by counsel or lucky enough to come across the clause.

Worse, the philosophical and logical foundations of the reversionary interest remain weak. It is unclear why, aside from sentimental reasons, the heirs of creators of copyrightable works should be entitled to an ownership interest in works which the author licensed or sold during his or her lifetime. Not only is no other form of intellectual property treated in this fashion, no other form of property whatsoever is treated this way-a patent, apartment complex or shares of capital stock once owned by a deceased individual are not suddenly snatched from their current owners and bestowed upon an estate on the twenty-fifth anniversary of the death. That threshold further highlights the arbitrary nature of the interest: if the concern is to ensure that the heirs of creators are not left destitute, why would the law require them to wait twenty-five years?

Our Copyright Act requires many alterations to make it easily comprehensible and coherent. Eliminating the reversionary interest would be a minor step in the right direction.

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CBSC Delivers Revised "Money for Nothing" Decision

Posted on September 6, 2011 by Bob Tarantino

On August 31, 2011, the Canadian Broadcast Standards Council (CBSC), the private body which administers the codes of standards and conduct created by the Canadian Association of Broadcasters (CAB), announced its "revised" decision in respect of the Dire Straits song "Money for Nothing" (for previous Signal coverage of the CBSC's original decision and its aftermath, see here and here).  (One curiosity worth noting: according to the text of "revised" decision, it was apparently decided on May 17, 2011 - it is unclear why the decision was only announced and released three months later.) 

To recap: in January 2011 the CBSC released a decision of its Atlantic Regional Panel which, responding to a listener complaint, held that the radio broadcast of the Dire Straits song "Money for Nothing", which contained the word "f****t" (artfully called "the other f-word" in the revised decision), violated Clause 2 of the CAB Code of Ethics, and Clauses 2, 7 and 9 of the CAB Equitable Portrayal Code (all of which counsel against the use of language which is abusive, offensive, derogatory or results in negative portrayal on the basis of, among others, sexual orientation).  The Atlantic Regional Panel's decision ignited a negative public reaction, one which was so pronounced that the Canadian Radio-Television and Telecommunications Commission (CRTC) was prompted, after being buried by outraged public complaints, to send a public letter to the CBSC asking them to reconsider the decision - a rather remarkable turn of events, seeing as (a) there is normally no appeal mechanism for CBSC decisions, (b) the CRTC has no formal oversight powers over the CBSC, and (c) the people complaining to the CRTC were evidently confused about precisely to whom they should have been complaining, since the CRTC had nothing to do with the CBSC decision.  The CBSC convened what it called an "ad hoc national panel" to reconsider the decision, and that ad hoc panel has now released a "revised" decision, which, to mangle the terminology, "overturns" the earlier Atlantic Regional Panel decision.

Interested readers should peruse two items from the CBSC: both the lengthy National Panel decision and also the Press Release about the decision which was released by the CBSC.

To summarize the revised decision: using "the other f-word" in radio broadcasts is, in general, inappropriate and a violation of the Code of Ethics and the Equitable Portrayal Code, however, in the context of this song, the use of the word "f****t" was acceptable because it was in furtherance of the artistic device of portraying the intolerant, bigoted individual from whose perspective the lyrics of the song are being sung; all that being said, because there are numerous alternative versions of the song which have been released by the band and which do not make use of "the other f-word", those alternative versions are to be preferred, but broadcasting the original, unexpurgated version of the song will not, in itself, be a violation of the applicable Codes.

And so ends one of the more exciting episodes in the CBSC's history (assuming that another new, previously unknown appeal mechanism is not devised).  It strikes me that the revised decision is the preferable of the two, though the entire saga hopefully highlights the deficiencies of the existing process and demonstrates the need for an internal appeal/review device within the existing CBSC framework.

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Chasing Reputation - Osgoode Hall Law Journal Article

Posted on September 4, 2011 by Bob Tarantino

My article "Chasing Reputation: The Argument for Differential Treatment of 'Public Figures' in Canadian Defamation Law" has been published in the Osgoode Hall Law Journal (citation: 48 OHLJ 595) and is now available online.  Canadian defamation law has over the last few years been one of the more active areas of law of interest to entertainment lawyers, and it continues to pose challenges for journalists, media outlets, documentary filmmakers and writers (and those who advise them).  The article crafts an argument that Canadian defamation law should be modified to take account of the unique reputation-creating powers of "public figures" (a category which includes "celebrities").  From the abstract:

When comparing the seminal Supreme Court of Canada defamation decisions of the 1990s and 2000s, it is apparent that the Court’s view on the importance of protecting reputation has changed. Recent decisions hail the importance of using freedom of expression as a countervailing interest against the oft-criticized strictures of the common law of defamation. Fundamental alterations in the nature of mass and interactive media and in the nature of reputation are two phenomena informing this change. Increased attention to the theorizing of “reputation,” the interest whose protection animates the entire tort of defamation, reveals that reputation is itself a highly constructed, contextual, and malleable artifact. This article proposes recasting the tort of defamation into two different tracks: one for public figures, who pose the highest risk of abusing the tort, and one for private plaintiffs, whose reputational interest is akin to traditional notions of reputation.

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