Bill C-32: A Practical Solution on Digital Locks?

One of the more contentious elements of Bill C-32 (The Copyright Modernization Act) is the introduction of provisions addressing “digital locks” or “technological protection measures” (found in Sections 47 and 48 of the Bill, which would create new Sections 41 and 42 of the Copyright Act).  Critics of the digital locks provisions decry them in the following terms (let’s use Michael Geist’s comments as representative):

All these attempts at balance should be welcomed, yet they are undermined by the no-compromise position on digital locks.

The foundational principle of the new bill is that anytime a digital lock is used, it trumps virtually all other rights. This means that both the existing fair dealing rights and Bill C-32’s new rights all cease to function effectively so long as the rights holder places a digital lock on their content or device.

I want to contest the notion that the current draft of Bill C-32 represents a “no compromise position”.  Given that we’ve only had the text of the Bill for a few hours, this is by necessity going to be a preliminary assessment.

In practical terms, the digital lock provisions enable a copyright to place a “lock” on their content which control access to that content and acts to prohibit certain reproductions – so, for example, the distributor of a movie on Blu-ray could place a digital lock on the Blu-ray which prevented the purchaser of that disc from copying the content of the disc onto the hard drive of the purchaser’s desktop computer.  The purchaser might say they wanted to make the copy solely for purposes of creating a back-up, in case the original disc was lost.  The distributor would respond by saying that they don’t want to run the risk that the purchaser is going to upload the movie onto a file-sharing site, thereby allowing other users to download the movie for free.  But, the purchaser might respond, Bill C-32 specifically allows me to create back-up copies (see Section 22 of the Bill, which creates a new Section 29.22 of the Act).  Tough, the distributor would respond: the Bill makes it clear that “breaking” a digital lock is infringement, and that doesn’t change just because the lock is being “broken” in order to facilitate what would otherwise be a non-infringing use.  Hence, as Geist puts it, “anytime a digital lock is used, it trumps virtually all other rights”.

As a legal matter, Geist is correct.  But this Bill needs to be assessed not just as a theoretical matter, but as a practical one.  And if we drill down a bit further into the proposed legislation, what we see is that the government has, as in so many other areas in this Bill, crafted what seems to be a rather elegant solution: the statutory damages provisions have been altered to the point where it disincentivizes a rightsholder from bringing an infringement action for infringing activity which is for private use.  The practical result?  “Breaking” a digital lock is copyright infringement, but is no more likely to result in a lawsuit against your average “private” infringer than they were likely to be sued for recording TV shows on their PVR over the past few years.

Here’s the analysis: Section 46 of the Bill modifies the statutory damages provisions (Section 38.1 of the Act) to draw a distinction between infringement for commercial purposes (where damages can range from $500 to $20,000 for each work infringed) and infringements for non-commercial purposes (where damages can range from $100 to $5,000 for all works infringed).  So right off the top we’ve made it less punitive for “private” infringers.  The Bill then goes to mandate that courts, in the case of “private” infringers, consider the need for damages awards to be proportionate and take account of any hardship the damages might impose.

All of which is nice, but largely irrelevant (though indicative of the trend), because, even more importantly, what will become Section 41.1(3) of the revised Act provides that statutory damages are not available to an owner who sues an individual for “breaking” a digital lock when that breaking was done only for private purposes – which means, consistent with prior jurisprudence on copyright damages, damages are calculated to put a rightsholder in the position they would have occupied but for the infringement.  And in the case of an infringement for private use (such as the back-up copy illustration used above), those damages are likely to be negligible.  Absent the prospect of statutory damages, the likelihood of a rightsholder bringing an action for enforcement is radically reduced, since they’d be forced to expend enormous amounts of money to recover virtually nothing.

Thus, the proposed language seems to navigate between the two positions: it allows rightsholders to say that their digital locks are secure and claim a moral victory by describing the breaking of a digital lock as infringement, but then accords private infringers some comfort that the prospect of actually being sued is fairly minimal (after all, in all the years prior to the introduction of Bill C-32, when the full weight of statutory damages was available to rightsholders, how many lawsuits have been brought in Canada by rightsholders against people who were format-shifting or time-shifting their entertainment product?).  It’s not a perfect solution, but life rarely admits of those.

The foregoing could be criticized on the basis that it is hopelessly naive to think that rightsholders will not sue – look south of the border and you’ll find plenty of examples.  But admitting that involves ignoring a few things: the very different litigation cultures which obtain in Canada and the United States; the fact that the new Bill eliminates the prospect of statutory damages for “private” digital lock infringers but the lawsuits which have been criticized in the US are predicated on the availability of those very statutory damages; and the fact that mass lawsuits, as an empirical matter, simply haven’t been brought in Canada to date (the fate of the initial attempt represented by the BMG v John Doe (2004 FC 488) case is illustrative).

In short, with respect to digital locks, it seems that Bill C-32, in its practical details, represents a compromise (imperfect as all such compromises necessarily are) – and likely one that all interested stakeholders can live with.

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Bob Tarantino

About Bob Tarantino

Bob Tarantino is Counsel at Dentons Canada LLP and focuses his practice on the interface between the entertainment industries and intellectual property law, with an emphasis on film and television production, financing, licensing, distribution, and IP acquisition and protection. His clients range from artists and independent producers to Canadian distributors and foreign studios and financiers at every stage of the creative process, from development to delivery and exploitation.

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3 replies on “Bill C-32: A Practical Solution on Digital Locks?”

  1. You’re right, it is hopelessly naive.
    You’re saying its okay to criminalize everyday activities performed by millions of Canadians, simply because the you don’t think the content industry will bother to go after them?
    That’s insane. Passing laws that everyone is going to be breaking all the time just decreases peoples’ respect for the rule of law.
    If you want an honest compromise, just change the text of the bill so that it clearly states that breaking a digital lock is allowed as long as it is for a legal purpose. Then educators, security researchers, Linux users and mashup artists will be able to break the digital lock in order to access their legal rights, but someone who made an infringing copy of a work would still be able to be penalized for breaking the digital lock on it (e.g. if they want to go after large-scale counterfeiters or those who make lock-breaking technology and sell it to pirates).

  2. You appear to be correct on the front face of this argument about real world practical outcomes, although we should reject laws that over broadly criminalize what are admittedly acceptable behavior, even if there is no imminent threat of significant repercussions.
    However, there is a back side to this argument, and it’s very important:
    C-32 also effectively prohibits the production, distribution, or importation of the tools needed to circumvent DRM for infringing purposes. This effectively removes legal access to the DRM breaking tools as well.
    Example: I buy a DVD movie for my kids, and wish to back it up. I find that I cannot copy the disk, even though the label doesn’t say it’s protected. I go to Staples, but the clerk tells me there is no program on their shelves that can do it. But he mentions a program called AnyDVD, which will unlock the DVD so I can copy it. I find the Slysoft website, and buy AnyDVD from them online, from out of the country. I now make my backup.
    I have broken at least three laws. I violated the copyright, violated the DRM, and imported the software to do it. Note that any program that can copy protected DVD’s, even as a secondary function (Nero?), will become illegal to sell in Canada as a result.
    I conclude that the only acceptible way forward is to explicitly allow DRM to be broken for all non-infringing uses, and to drop altogether the clauses concerning the tools. The matter is too complex, and there are too many unintended and unforseeable consequences, for this law to stand as reasonable justice.
    Better yet, the law should drop all regulation in favor of DRM / TPM’s, because they are merely temporary technical details that may not stand the test of time and markets, and thus should not be included in the subject matter of legislation that purports to be technologically neutral and forward looking.
    If anything, DRM / TPM’s pose a dire threat to public safety and overall security. A truly forward looking law would forsee these dangers, and legislate against this technology, by setting strict limits on its usage to ensure that it poses no threats to our rights, safety, or security.

  3. I wish you guys were actually programmers then you’d see how fundamentally naive and stupid the protection for digital locks is and you’d see the grave danger it puts the entire software profession in.
    Here’s an even more clear example: C32 denies users of opensource video players the ability to play DVD movies, PERIOD. This is because none of the giant media companies will license their DRM in an opensource manner, meaning that OSS people have to crack DVD encryption with DeCSS just to play a movie they bought. Just to see the video! So C32 says this violates TPM and is infringement. So anti-competitive practices which are circumvented today due to our FREEDOM to use our own computers are going to be enshrined in law.
    We’re not even talking about piracy here, we’re talking about playing DVDs. About buying a movie, and watching it. That’s what C32 takes away.
    There’s nothing moral or just about it.

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