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SECTION I: DEPARTMENTAL OVERVIEW

Minister's Message

Our government is committed to positioning Canada to exit the current downturn quickly and emerge stronger and more competitive in the global economy. In doing so, Industry Canada and its Portfolio partners will continue to play their key roles in increasing the country's capacity to create jobs and economic growth – for next year and the next decade.

While the recession originated beyond our borders, it had real consequences for Canadians and Canadian business. And despite improving conditions, there is work to be done. In 2010, a major focus will be completing the stimulus measures of Canada's Economic Action Plan (www.actionplan.gc.ca). Introduced in Budget 2009, the Plan's full effect will be felt in 2010-11, and its measures will help solidify the recovery.

Over this period, Industry Canada and its Portfolio partners will work with industries and sectors hit hardest by the recession. Initiatives will include activities to boost community economic development and to extend broadband infrastructure to underserved or unserved areas across the country. To build on the momentum gained through our past investments in science and technology, significant effort will be directed to shaping the knowledge-based economy.

Industry Canada will also focus on supporting business and industry to capitalize on emerging opportunities at home and abroad. Getting our economic frameworks right, through forward-looking policies, is central to ensuring Canada's place in the global marketplace. We remain committed to two-way trade and investment, which raises our capacity to create jobs and economic growth and provides for sustainable prosperity.

In 2010-11, the Copyright Board of Canada's goal is to continue to ensure balanced decision making and to provide proper incentives for the creation and use of copyrighted works. In addition, the Board will implement a performance measurement and evaluation strategy to help improve management practices.

I will work with my colleagues, the private sector and other governments to advance the recovery and build the foundation for a strong, competitive economy.

It is my pleasure to present this year's Report on Plans and Priorities for the Copyright Board of Canada.

 

Tony Clement
Minister of Industry

Raison d'être

The Copyright Board of Canada's program objective is to set royalties which are fair and equitable to both copyright owners and users of copyright-protected works. This includes setting fair and equitable terms and conditions so as to permit the use of works when the owner of the copyright cannot be located.

The Board is an independent administrative agency that has been conferred department status for purposes of the Financial Administrative Act. The mandate of the Board is set out in the Copyright Act (the "Act"). The Board is empowered to establish, either mandatorily or at the request of an interested party, the royalties to be paid for the use of copyrighted works when the administration of such works is entrusted to a collective administrative society.

The Copyright Board of Canada is an economic regulator. It deals with complex social, cultural, demographic, economic and technological issues (e.g., communications technology, use of music over the Internet, blank CDs, and software management systems to protect music or administer rights). The Board's decisions are not appealable, but can be the subject of judicial review by the Federal Court of Appeal. The Board has existed in one form or another since the 1930s, but its jurisdiction was significantly expanded in 1989 and 1997.

The program objective of the Board underlies the achievement of strategic outcomes related to innovation through new knowledge, which has become the main source of competitive advantage in all sectors of economic activity and is closely associated with increased exports, productivity growth, and the creation of new firms.

In this context, our country's handling of intellectual property matters is a critical element in our long-term success in innovation, and by extension, to our long-term economic health. The terms and conditions by which intellectual property owners (such as owners of copyrighted works) are compensated will largely define the incentive structure for innovation in and creation of copyrighted materials. In addition, the design and implementation of regulations can have a significant impact on innovation and competitiveness, particularly in the areas of intellectual property rights.

Operating Environment

The mandate of the Copyright Board of Canada is set out in the Act as amended in 1997. The Board has powers of a substantive and procedural nature. Some powers are granted to the Board expressly in the Act, and some are implicitly recognized by the courts.

The Act requires that the Board certify tariffs in the following fields: the public performance or communication of musical works and of sound recordings of musical works, the retransmission of distant television and radio signals, the reproduction of television and radio programs by educational institutions and private copying. In other fields where rights are administered collectively, the Board can be asked by a collective society to set a tariff; if not, the Board can act as an arbitrator if the collective society and a user cannot agree on the terms and conditions of a licence.

The examination process is always the same. The collective society must file a statement of proposed royalties which the Board publishes in the Canada Gazette. Tariffs always come into effect on January 1. On or before the preceding 31st of March, the collective society must file a proposed statement of royalties. The users targeted by the proposal (or in the case of private copying, any interested person) or their representatives may object to the statement within sixty days of its publication. The collective society in question and the opponents will then have the opportunity to argue their case in a hearing before the Board. After deliberations, the Board certifies the tariff, publishes it in the Canada Gazette, and explains the reasons for its decision in writing.

As a rule, the Board holds hearings. No hearing will be held if proceeding in writing accommodates a small user that would otherwise incur large costs. The hearing may be dispensed with on certain preliminary or interim issues. No hearings have been held yet for a request to use a work whose owner cannot be located. The process has been kept simple. Information is obtained either in writing or through telephone calls.

Mandate, Roles and Responsibilities

Mandate of the Board

The Board is an economic regulatory body empowered to establish, either mandatorily or at the request of an interested party, the royalties to be paid for the use of copyrighted works, when the administration of such copyright is entrusted to a collective-administration society. The Board also has the right to supervise agreements between users and collective societies and issues licences when the copyright owner cannot be located.

The Copyright Board of Canada was established on February 1, 1989, as the successor of the Copyright Appeal Board. Its responsibilities under the Act are to:

• certify tariffs for the public performance or the communication to the public by telecommunication of musical works and sound recordings [sections 67 to 69];
  
• certify tariffs, at the option of a collective society referred to in section 70.1, for the doing of any protected act mentioned in sections 3, 15, 18 and 21 of the Act [sections 70.1 to 70.191];
  
• set royalties payable by a user to a collective society, when there is disagreement on the royalties or on the related terms and conditions [sections 70.2 to 70.4];
  
• certify tariffs for the retransmission of distant television and radio signals or the reproduction and public performance by educational institutions, of radio or television news or news commentary programs and all other programs, for educational or training purposes [sections 71 to 76];
  
• set levies for the private copying of recorded musical works [sections 79 to 88];
  
• rule on applications for non-exclusive licences to use published works, fixed performances, published sound recordings and fixed communication signals, when the copyright owner cannot be located [section 77];
  
• examine, at the request of the Commissioner of Competition appointed under the Competition Act, agreements made between a collective society and a user which have been filed with the Board, where the Commissioner considers that the agreement is contrary to the public interest [sections 70.5 and 70.6];
  
• set compensation, under certain circumstances, for formerly unprotected acts in countries that later join the Berne Convention, the Universal Convention or the Agreement establishing the World Trade Organization [section 78].

In addition, the Minister of Industry can direct the Board to conduct studies with respect to the exercise of its powers [section 66.8].

Finally, any party to a licence agreement with a collective society can file the agreement with the Board within 15 days of its conclusion, thereby avoiding certain provisions of the Competition Act [section 70.5].

Strategic Outcome and Program Activity Architecture (PAA)

Program Activity Architecture
STRATEGIC OUTCOME Fair decision-making to provide proper incentives for the creation and use of copyrighted works		PROGRAM ACTIVITY Copyright Tariff Setting and Issuance of Licences Internal Services

Planning Summary

Financial Resources ($ thousands)

2010-11	2011-12	2012-13
3,110	3,112	3,112

Human Resources (Full-time Equivalents (FTE))

2010-11	2011-12	2012-13
16	16	16

Note: In addition to the 16 full-time equivalents employees, the Board has up to a maximum of 5 Governor-in-Council appointees.

Strategic Outcome: Fair decision-making to provide proper incentives for the creation and use of copyrighted works
Performance Indicator Percentage of tariff certified within 12 months Percentage of licences issued within 45 days Level of satisfaction of stakeholders			Target 70% of tariffs certified within 12 months 70% of licences issued within 45 days 70% satisfaction rate
Program Activity	Expected Results	Forecast Spending 2009-10 ($ thousands)	Planned Spending ($ thousands)			Alignment to Government of Canada Outcomes
			2010-11	2011-12	2012-13
Copyright Tariff Setting and Issuance of Licences	Fair and equitable tariffs and conditions	2,589	2,512	2,514	2,514	An innovative and knowledge-based economy
Internal Services		616	598	598	598
Total Planned Spending		3,205	3,110	3,112	3,112

Innovation through new knowledge has become the main source of competitive advantage in all sectors of economic activity and is closely associated with increased exports, productivity growth, and the creation of new firms. In this context, our country's handling of intellectual property matters is a critical element in our long-term success in innovation, and by extension, to our long-term economic health. The terms and conditions by which intellectual property owners (such as owners of copyrighted works) are compensated will largely define the incentive structure for innovation in and creation of copyrighted materials. In addition, the design and implementation of regulations can have a significant impact on innovation and competitiveness, particularly in the areas of intellectual property rights.

The Copyright Board of Canada recognizes the need to ensure an effective and efficient copyright regulatory regime in order to attain the maximum productivity in those sectors that create and use copyrighted works. Further, the strategic outcomes of a fair and competitive marketplace and reasonable opportunities for Canadian firms to export copyright protected goods and services in the music, content creation and programming areas, as well as the downstream broadcasting, publishing and entertainment industries will be impacted by the performance of the Copyright Board of Canada.

Contribution of Priorities to Strategic Outcome

Departmental Priorities

Priority Name	Type	Links to Strategic Outcome	Description
1. Ensure timely and fair processes and decisions	Ongoing	Fair decision-making to provide proper incentives for the creation and use of copyrighted works	Leads to a more efficient process and to decisions that take into account the ever-changing technological environment, global events and new business models
2. Advance the analytical framework for decisions and the regulatory processes for tariff-setting	Ongoing		Ensures a proper assessment by the Board of risks associated with economic and technological changes in relevant industries
3. Improve management practices	Ongoing		Favours the implementation of relevant and efficient management practices at the Board

There are three priorities associated with the Copyright Board of Canada's strategic outcome of achieving fair decision-making to provide proper incentives for the creation and uses of copyrighted works. These are:

Operational Priorities

Ensure timely and fair processes and decisions

To achieve this priority, the Board will need to ensure that participation costs in the hearing process are being kept as low as possible, thus encouraging participation of the appropriate parties and streamlining the process. The Board will also need to provide appropriate guidance, information and analysis to the participants in order to facilitate the examination process and to foster greater participants' satisfaction. This will be done in particular through telephone advisories and case management meetings with representatives. Finally, by engaging in pre-hearing consultations and information gathering, and by conducting well organized proceedings which address key issues facing copyright-related industries, the Board will be able to issue timely, fair and consistent decisions.

The monitoring of this priority will be achieved by conducting surveys of hearing participants, with follow-up examination and determination of alternative procedural practices to improve the efficiency of the regulatory process. The achievement of this result is also directly monitored through the timely conduct of hearing processes and lack of interruption in proceedings due to administrative and technical delays. In addition, the implementation of a pre-hearing joint statement of (non-contested) facts and handling of legal issues solely through written submissions will improve the efficiency of the process. Finally, the Board plans to continue to examine, for each process, how to structure and sequence witnesses and hearing stages so as to eliminate duplication and maximize time spent on relevant issues.

In addition, in 2010-11 the Board intends to implement a working group comprised of key stakeholders to examine possible avenues to improve the Board's rules of practice and procedure. These improvements should aim at reducing uncertainty and streamlining the procedures while safeguarding the fairness of the process.

The rationale underlying this priority is to minimize administrative costs to Canadians from the setting of tariffs and to streamline the process in the face of increasing complexities in hearing subject matters, thus increasing regulatory efficiency. To the extent that this also leads to fairer decision-making, the overall innovation capability of parties affected by the copyright tariff process will be improved.

Advance the analytical framework for decisions and the regulatory processes for tariff-setting

Among the most significant risks which the Board faces in achieving its strategic outcomes are the potentially disruptive impact of new technologies, in particular on how copyright material is utilized, distributed and monitored. Fair and equitable decisions critically depend on the Board's ability to identify, understand and assess the industry issues before they undermine or adversely impact existing copyright regimes. The Board's approach to managing the technology risk is to systematically monitor relevant journals, other publications and websites, and to attend industry seminars and conferences.

Knowledge of the international experience is also a key tool in addressing the challenges of changing technology and the impact of global events. By comparing experiences across different countries, the Board expects to gain early warning of significant developments and their likely impacts on the Canadian situation.

Leadership in copyright matters will continue to build on the groundwork performed in the past. The Board plans to continue its leadership role in the establishment and expansion of international activities such as sharing of procedures, decisions and other information. With a view to further this leadership, the Board will continue to be actively involved with the international Society for Economic Research on Copyright Issues in 2010-11.

By its involvement in international activities as they relate to copyright tariff setting in other parts of the world, the Board ensures that its own tariff-setting processes are cognizant of developments outside of Canada.

Management Priorities

Improve Management Practices

In 2009-10, the Board received additional funding from Industry Canada and Canadian Heritage. This additional funding was needed to ensure that the Copyright Board is able to adequately fulfill its mandate. In 2010-11, the Board will strive to hire the required additional employees at different positions in the organization.

The Copyright Board will continue to work in partnership with four other small quasi-judicial agencies: the Canadian Artists and Producers Professional Relations Tribunal, the Registry of the Competition Tribunal, the Transportation Appeal Tribunal and the Public Service Staffing Tribunal (the “cluster group”) on implementing government-wide initiatives and continuing valuable work on those initiatives already implemented.

The Board is committed to offer training and development to all its employees and thus encourage learning and skills development on the part of all employees.

The Board will review its Human Resources Plan to assess the changing needs of the Board and will take into account succession planning. It is essential that the Board continue to ensure that it has the capacity it needs to better react to the changing nature of work driven by technology, which will result in better service to Canadians.

Furthermore, it will continue to work on an evaluation strategy and performance measurement tools.

Risk Analysis

The Board is responsible for tariffs that are estimated to be worth over $300 million annually. In fact, copyright tariffs underpin several industries which, according to a Conference Board of Canada's study (Valuing Culture, Measuring and Understanding Canada's Creative Economy, Conference Board of Canada, August 2008), generated in 2007 an amount representing 7.4% of Canada's GDP when taking into account the direct, indirect and induced contribution. They also contributed 1.1 million jobs to the economy. The stakes are considerable both for copyright holders and for users of copyright. Consequently, interventions before the Board are thorough, sophisticated and often involving expert witnesses, litigation specialists and detailed econometric, business and financial studies, surveys and evidence.

The Board must consider the underlying technologies (such as the Internet, digital radio, satellite communications), the economic issues and the interests of owners and users in order to contribute, with fair and equitable decisions, to the continued growth of this component of Canada's knowledge industries. Sound tariff decisions avoid serious disruption in affected sectors of the national economy and costly and time-consuming court challenges.

The decisions the Board makes are constrained in several respects. These constraints come from sources external to the Board: the law, regulations and judicial pronouncements. Others are self-imposed, in the form of guiding principles that can be found in the Board's decisions.

Court decisions also provide a large part of the framework within which the Board operates. Most decisions focus on issues of procedure, or apply the general principles of administrative decision-making to the specific circumstances of the Board. However, the courts have also set out several substantive principles for the Board to follow or that determine the ambit of the Board's mandate or discretion.

Among those factors, the following seem to be the most prevalent: the coherence between the various elements of the public performance of music tariffs, the practicality aspects, the ease of administration to avoid tariff structures that make it difficult to administer the tariff in a given market, the search for non-discriminatory practices, the relative use of protected works, the taking into account of Canadian circumstances, the stability in the setting of tariffs that minimizes disruption to users, as well as the comparisons with “proxy” markets and comparisons with similar prices in foreign markets.

Expenditure Profile

For fiscal year 2010-11, the Copyright Board of Canada plans to spend $3.1 million to meet the expected results of its program activities and contribute to its strategic outcome.

The figure below illustrates the Copyright Board's spending trend from 2006-07 to 2012-13.

For the 2006-07 to 2009-10 periods, the total spending includes all Parliamentary appropriations: Main Estimates, Supplementary Estimates, Treasury Board Vote 10, 15, and 23. It also includes carry forward adjustments. For the 2010-11 to 2012-13 periods, the total spending corresponds to the planned. Supplementary funding and carry forward adjustments are unknown at this point and are therefore not reflected.

The core funding, which excludes carry forward adjustments and supplementary funding, illustrates the baseline funding the Board receives from Parliamentary appropriations. Since 2009-10, the Board's core spending increased due to a permanent transfer of funds received from Industry Canada and Canadian Heritage to support operating requirements resulting from Bill C-32 (an Act to amend the Copyright Act) for a total of $430,000.

Voted and Statutory Items

		($ thousands)
Vote or Statutory Item	Truncated Vote or Statutory wording	2010-11 Main Estimates	2009-10 Main Estimates
45	Program expenditures	2,818	2,340
(S)	Contributions to employee benefit plans	293	285
	Total Department	3,110	2,624

Note: The difference between the 2009-10 and 2010-11 Main Estimates is due to salary increases and adjustments to the Employee benefit plans.

Details may not add to totals due to rounding.

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