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Ottawa Launches Overhaul of Cultural Policy

The Department of Canadian Heritage has launched a review of the federal government’s cultural policy toolkit that could bring significant changes to the governance framework that underpins the broadcasting, media and cultural industries.

Announced this past weekend by Heritage Minister Mélanie Joly, the review is a response to the digital shift that is transforming the creative sector. The stated goal of the review is to ensure that Canadian content is positioned to succeed in an increasingly global marketplace which, as stakeholders well know, has been buffeted by the rapid evolution of new technologies that have changed the ways content is created and consumed.

Minister Joly made it clear in an interview with the Globe and Mail that each of the main governance levers – laws, policies, institutions and programs – will be evaluated. She told the Globe that she believes “the current model is broken, and we need to have a conversation to bring it up to date” and that “everything is on the table”.

Beyond a generally “digital approach”, it’s anyone’s guess as to what the policy outcomes of the review will be. The minister has indicated that she doesn’t want to go into consultations with preconceived notions of what they might yield, and has refused to speculate about eventual changes. However, the “drivers of change” articulated in the announcement of the review provide some sense of the likely focus:

  1. A fluid environment that blurs traditional categories like “creator” and “user”, “artists” and “audience”, and “professional” and “amateur”;
  2. The emergence of new players and intermediaries that have disrupted traditional business models;
  3. An increasingly open and interconnected world in which access to a global marketplace comes at the price of stiff competition in formerly local cultural markets; and
  4. Changes in consumer expectations driven by increased digital connectivity and mobility.

The consensus from the commentariat is that the review will be the most comprehensive re-evaluation of the industry since the Mulroney government revised the Broadcasting Act in 1991.

Content producers and other stakeholders should note that an online “pre-consultation questionnaire” can be accessed on the ministry’s website until May 20, 2016. The pre-consultation will help define the scope of the public consultation which will begin this summer and wrap up by the end of the year. An expert advisory group will be struck to shepherd the review, which is officially called Strengthening Canadian Content Creation, Discovery and Export in a Digital World.

Ottawa Launches Overhaul of Cultural Policy

Canada’s Anti-Spam Law – New Guidance on Offering Apps, Software

Canada’s Anti-Spam Law (CASL) targets more than just email and text messages 

CASL also prohibits installing a “computer program” – including an app, widget, software, or other executable data – on a computer system (e.g. computer, device) unless the program is installed with consent and complies with disclosure requirements.  The provisions in CASL related to the installation of computer programs will come into force on January 15, 2015.

Application outside Canada

Like CASL’s email and text message provisions, the Act’s “computer program” installation provisions apply to persons outside Canada.  A person contravenes the computer program provisions if the computer system (computer, device) is located in Canada at the relevant time (or if the person is in Canada or is acting under the direction of a person in Canada).

Penalties

The maximum penalty under CASL is $10 million for a violation of the Act by a corporation.  In certain circumstances, a person may enter into an “undertaking” to avoid a Notice of Violation.  Moreover, a private right of action is available to individuals as of July 1, 2017.

CASL’s broad scope leads to fundamental questions – how does it apply?

The broad legal terms “computer program”, “computer system” “install or cause to be installed” have raised many fundamental questions with industry stakeholders.  The CRTC – the Canadian authority charged with administering this new regime – seems to have gotten the message.  The first part of the CRTC’s response to FAQ #1 in its interpretation document CASL Requirements for Installing Computer Programs is “First off, don’t panic”.

New CRTC Guidance 

The CRTC has clarified some, but not all of the questions that industry stakeholders have raised.  CRTC Guidance does clarify the following.

  • Self-installed software is not covered under CASL.  CASL does not apply to owners or authorized users who are installing software on their own computer systems – for example, personal devices such as computers, mobile devices or tablets.
  • CASL does not apply to “offline installations“, for example, where a person installs a CD or DVD that is purchased at a store.
  • Where consent is required, it may be obtained from an employee (in an employment context); from the lessee of a computer (in a lease context); or from an individual (e.g. in a family context) where that individual has the “sole use” of the computer.
  • An “update or upgrade” – which benefits from blanket consent in certain cases under CASL – is “generally a replacement of software with a newer or better version”, or a version change.
  • Grandfathering – if a program (software, app, etc.) was installed on a person’s computer system before January 15, 2015, then you have implied consent until January 15, 2018 – unless the person opts out of future updates or upgrades.

Who is liable?

CRTC staff have clarified that as between the software developer and the software vendor (the “platform”), both may be liable under CASL.  To determine liability, the CRTC proposes to examine the following factors, on a case-by-case basis:

  • was their action a necessary cause leading to the installation?
  • was their action reasonably proximate to the installation?
  • was their action sufficiently important toward the end result of causing the installation of the computer program?

CRTC and Industry Canada staff have indicated that they will be publishing additional FAQs, in response to ongoing industry stakeholder questions.

See:  fightspam.gc.ca  and consider signing up for information updates through the site.

 

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Canada’s Anti-Spam Law – New Guidance on Offering Apps, Software

Video Game Resources

A couple of noteworthy recent publications relating to the Canadian video game industry:

Video Game Resources

(More) Crowdfunding for Canadian Entertainment Projects

The 2013 Academy Awards were something of a coming-out party for crowdfunded films: three crowdfunded films were nominated for awards. One of those films, Buzkashi Boys, has a Canadian connection: Montreal artists get a financial kick out of crowd funding. And one of those films, Inocente, won the Oscar for Best Documentary Short. So we have evidence that crowdfunded films can be both commercially and critically viable projects.

In a new-to-me publication (actually released in August 2012), the Canada Media Fund commissioned Nordicity to create an excellent report entitled Crowdfunding in a Canadian Context: Exploring the Potential of Crowdfunding in the Creative Content Industries. Packed with information (who knew there were more than ten Canadian crowdfunding platforms?), market trends and food for thought, the CMF/Nordicity is an invaluable resource for surveying the Canadian crowdfunding landscape.

(More) Crowdfunding for Canadian Entertainment Projects

Crowdfunding for Canadian Entertainment Projects

One of the inevitable challenges faced by independent entertainment entrepreneurs, such as film producers or videogame developers, is obtaining financing for the development, production and eventual delivery of their project. However, attempting to “raise” money for a project by asking strangers to contribute funds to it in exchange for participating in the potential success of the project engages a variety of legal concerns, not the least of which is whether such solicitation is a violation of securities laws. There are also mechanical impediments to raising financing, such as the ability to “broadcast” the potential project to a sufficient number of interested “investors” and inherent transaction costs which mean that it is not always practical to obtain small dollar amounts from multiple investors – it would be great if you could find 100,000 people each willing to contribute $10 to your project, but how do you go about doing that? (And if you’re a securities lawyer, you might start getting hives thinking about the implications of all those people residing in different jurisdictions, entailing the need for compliance with multiple sets of securities laws.)

One innovation which has attempted to harness the power of the internet and social media to solve these problems is “crowdfunding”.  (For a nice backgrounder on crowdfunding, see Nathan Monk’s “Crowdfunding: Is it Right for Your Start-up?”.) Prominent examples of crowdfunding websites include Kickstarter (which bills itself as a “funding platform for creative projects”) and Indiegogo. To avoid securities law concerns, crowdfunding sites often operate on a donation/reward model: creators set different donation levels of increasing monetary value which are coupled with increasingly valuable/desirable “rewards” matched to the donation levels.  So, for example, if we were interested in crowdfunding the recording of an epic spoken-word rendition of all of the posts here on the Signal, we might say that if you contributed $20 you would get a copy of the entire set of DVDs, for $40 you would get the DVDs plus a signed and personalized poster of our entertainment law group (actually more valuable than you’d think), for $100 you’d get to come hang out in the recording studio while we did the recording and for $1,000 we would re-name the blog in your honour.

There are some Canadian crowdfunding platforms out there: the nice folks at the Hot Docs festival run Doc Ignite, which describes itself as “a crowd-funding site for Canadian documentary works-in-progress”. The FAQ will answer everything you could want to know about crowdfunding in general and how Doc Ignite in particular work. At the time of writing of this post, the current Doc Ignite project is called “The Secret Trial 5”, they’re looking to raise $15,000, they’ve received $7,725 from 57 supporters and they offer rewards ranging from, among other rewards, attendance at a sneak peek screening of the completed film (at the $25 level) to, among other rewards, on-screen credits, attendance at editing sessions and the chance to vote on creative decisions (at the $500 level).

Of course, while interesting and fun in their own right, the need for entertainment projects seeking crowdfunding to shoe-horn their efforts into the donation/reward model can be unduly limiting: not all projects will be suitable for that model, and not all creators will want to avail themselves or their projects in a way which matches the expectations of the “reward”  model.  Since the “problem” with using crowdfunding to raise money in exchange for an “ownership” interest in the project (such ownership usually taking the form of participation in the “back-end” profits) is that it might trigger securities law obligations, what about modifying securities laws so that they facilitate (or at least don’t impede) crowdfunding?

In the United States, the JOBS Act (Jumpstart Our Business Startups Act) was enacted in April 2012, and it will modify existing securities laws to allow equity-based crowdfunding for up to $1,000,000 – in other words, rather than forcing crowdfunders to rely on the donation/reward model in order to avoid securities law entanglements, crowdfunders will be able to offer equity positions in the potential success of their creative projects. (For further details on how the JOBS Act changes will operate, with particular reference to entertainment industry projects, see the posts of Mark Litwak (and again) and Ronald L. Barabas.

In Canada, or at least in Ontario, the Ontario Securities Commission (OSC) is currently seeking public comment on whether to modify Ontario securities law in a manner which would allow for equity crowdfunding: in December 2012 the OSC released Consultation Paper 45-710. The Consultation Paper is worth reading for a number of reasons, not least of which it neatly summarizes existing securities law in a manner which is easy to understand. As Nathan Monk points out, some of the proposals the OSC is considering are:

  • crowdfunding websites (or “portals”) would be required to register with the OSC
  • investors would have to sign a “risk acknowledgement” form and would enjoy a two-day “cooling off” period which would them to back out of an investment
  • investors would be capped at contributing $2,500 to any single investment request and $10,000 overall in any calendar year
  • companies would be capped at raising $1.5 million in any 12-month period;
  • companies seeking funding could use social media to attract the attention of potential investors, but would be restricted to advertising the offering only on their company website or at the funding portal’s website
  • companies would have to provide investors with an “information statement” about the business, including a description of the potential risks
  • financial statements would need to be provided, and if more than $500,000 is sought, they would need to be audited financials

This would be a significant change to Ontario securities law, with potentially wide-ranging impact for entertainment entrepreneurs. The OSC is seeking public feedback by February 12, 2013 – details on where to submit comments can be found on page 44 of the Consultation Paper.

Crowdfunding for Canadian Entertainment Projects