Tonight I attended an amazing event put up in Vancouver by Roger Killen.

He invited 4 Vancouver entrepreneurs who have recently appeared on Dragons’ Den. Brad Friesen with Last Call, Scott Lim with B.K.H. Jerky, Dougieluv with Dougie The Modern Dog Dog and Dan Plante with Chawel were all in the same room, sharing secrets of their success in and outside of Dragons’ Den.

I had a chance to ask them all a question that was very important to me. Pay attention to their answers. They are instructive for anyone who is starting or is about to start a business.

My question went something like this:

As an IP lawyer, I am trained to tell my clients that it is crucial to have their intellectual property and other legal issues sorted out as early as possible.

Nobody really argues that having good contracts is better than not having good contracts, just as being healthy and wealthy is better than being sick and miserable.

However, aspiring entrepreneurs often tell me that their budgets are tight, and that they’ll deal with their legal stuff later, when their business has grown to be successful.

So in your experience, what’s the last stage at which startups can safely get away without having their legal affairs in order?

Dougie said that it’s imperative to take care of the legal stuff right away, ideally even before you actually start the business. You need to have your whole legal organized before you get out of the gate.

Brad said essentially the same thing and added that he regrets not having dealt with a U.S. trademark issue before he made his pitch before millions of people.

Dan backed the other two, and shared some great ideas about naming his product and difficulties surrounding patenting an invention on a tight budget.

The lesson is simple. Every successful entrepreneur fully understands the value of legal advice and intellectual property in creating a competitive advantage for their business.

Having your legal stuff organized does not guarantee your business success.

But if you do not have your contracts and intellectual property taken care of, you will never be able to enjoy a long-lasting success, simply because even if your business does become successful, there will always be enough leeches ready, willing and able to steal that success away from you.

Granted, as a copyright and trademarks lawyer, I have an direct interest in turning entrepreneurs into my clients.

So don’t take my word for it. Take it from those who have every right to be admired. Take it from people who grew their businesses from nothing.

Protect Your Ideas as early as you can and make sure to Cover Your Assets!

More flawed drafting…

Before the amendments to the Copyright Act, s. 19 only had a simple subsection (1), which stated that performers and makers of sound recordings had a right to be paid equitable remuneration for performance of in public or communication to the public by telecommunication of sound recordings, except for any retransmission. This provision was the same for anyone covered by the Act.

Now, s. 19 will create three separate regimes for performers and makers with a connection to Canada (s. 19(1)), performers and makers with a connection to a Rome Convention country (s. 19(1.1)) and performers and makers with a connection to a WPPT country (s. 19(1.2)).

This hardly makes any sense, especially if we look at potential consequences.

I wrote in my previous post on s. 19(1) of the Copyright Act that it sets out that performers and makers will have the right to equitable remuneration for communication of sound recordings by telecommunication but not for the making available right. Section 19(1.2) sets the same limitation for performers and makers of sound recordings with a connection to a WPPT country. That’s logical.

Now, here comes the inexplicable.

Section 19(1.1) sets out that performers and makers with a connection to Rome Convention countries will have the right to equitable remuneration for communication of sound recordings to the public by telecommunication, period. Under s. 2.4(1.1) of the Copyright Act, the term “communication to the public by telecommunication” also includes what is generally referred to as the “making available right”.

The Rome Convention does not set out a closed list of rights that states must grant to their nationals and thus to nationals of other Convention member-states. Rome Convention sets out a bare minimum of rights to be recognized and, more importantly, an obligation for member-states to set out the national regime of protection.

Just because the Rome Convention did not provide for the making available right, does not mean that nationals of Rome Convention countries should not be able to enjoy the right that Canada vests in Canadian performers and makers of sound recordings.

Just because Canada limits the right to equitable remuneration for communication to the public by telecommunication by removing the making available part out of it with respect to Canadians and those with a connection to WPPT countries, and just because the Rome Convention does not contain the making available right, does not mean that s. 19(1.1) will also have such limitation with respect to sound recordings with a connection to a Rome Convention country.

As I wrote in my post about new sections 17.1 and 17.2 of the Copyright Act, Canada will be violating its obligations under the Rome Convention.

Section 19 does the opposite by granting more rights with respect to sound recordings having a connection to Rome Convention countries, at the expense of Canadians and WPPT countries, because performers and makers of sound recordings with a Rome Convention connection will be entitled to equitable remuneration for communication of the sound recordings to the public by telecommunication, which, under s. 2.4(1.1) also includes the making available right.

Given that most WPPT members are also Rome Convention members, we will end up with a strange result: the right that was introduced by WPPT will not be available to performers and makers through WPPT, but it will be available to them through Rome Convention, which doesn’t guarantee such a right.

Well, at least they got the digital lock provisions right, right?

Copyright Modernization Act introduces several changes to the right of performers and sound recording makers in s. 19 of the Copyright Act.

Section 19(1) used to vest in performers and makers of sound recordings a right to be paid equitable remuneration for public performance of sound recordings that have been published and for their communication to the public by telecommunication, the only exception to that being made in the case of retransmission.

The Copyright Modernization Act adds another exception, which, honestly, I find utterly incomprehensible. I will quote it in full and then make a few comments:

If a sound recording has been published, the performer and maker are entitled, subject to subsection 20(1), to be paid equitable remuneration for its performance in public or its communication to the public by telecommunication, except for

(a) a communication in the circumstances referred to in paragraph 15(1.1)(d) or 18(1.1)(a), if the person entitled to the equitable remuneration is entitled to the right referred to in those paragraphs for that communication;…

And then we wonder why people frown upon the legalese.

To use the word “entitled” three times in different contexts in the same section of the Act requires some sophistication, I’m sure.

The first one quite clearly refers to the entitlement to be paid equitable remuneration.

The second one refers to “the person entitled to the equitable remuneration”, i.e. the performer and the maker of a published sound recording.

The third one refers to the entitlement to the making available right, referred to in paragraphs 15(1.1)(d) and 18(1.1)(a). Paragraphs 15(1.1)(d) and 18(1.1)(a), as you may recall from my comments on new subsections in Section 15 of the Copyright Act, are about distilling the making available right back from the general right of communication to the public by telecommunication, into which the making available right was merged by virtue of s. 2.4(1.1) of the Act.

So what the new s. 19(1)(a) is trying to say is that performers and makers of sound recordings are entitled to equitable remuneration for communication of the sound recordings to the public by telecommunication, except for situations when the sound recording is made available over the Internet.

I can understand a policy decision to only recognize an entitlement to equitable remuneration in respect of some forms of use and not others.

I can’t understand two things:

1. Why it is that the provision could not be written in a clear language?

2. What was the purpose of blending the making available right into the communication to the public right if for all meaningful intents and purposes it is treated differently in the Act? It’s not a case when a court is forced to interpret the law as it exists. The Copyright Modernization Act was supposed to be the most important reformulation of Canadian copyright laws in years. It’s a lesson from the first year law school legal interpretation class: don’t use the same term to refer to two distinct notions. If you plan to have separate rules for cats and dogs, don’t add a provision stating that for the purposes of the Act, a “cat” also includes a “dog”.

BOTTOM LINE: Bad. Incomprehensible language. Inconceivable why the term “communication to the public by telecommunication” that “for the purposes of the Act” was supposed to assimilate the making available right doesn’t cover the making available right for the purposes of s. 19(1).

Just as in the case of new subsections in Section 15 of the Copyright Act, Copyright Modernization Act adds subsections 18(1.1), 18(2.1), 18(2.2) and 18(4) to the Copyright Act.

In order not to sound like a broken record, I suggest that you read my comments regarding additions to s. 15 of the Copyright Act. The only difference is that this time the sloppy drafting will affect makers of sound recordings, not performers.

BOTTOM LINE: Awful, awful drafting. The intentions may have been good, but the resulting s. 18 is now more confusing than it used to be. A real shame for a massive amendment that the Copyright Modernization Act was supposed to achieve.

Copyright Modernization Act adds two new sections to the Copyright Act, 17.1 and 17.2.

The idea is noble, namely to recognize that performers too, not just authors, have moral rights with respect to their performances. Not all performances, only “live aural performances” and “performances fixed in a sound recording”. No such luck for all other performers.

The scope of the moral rights is the same as in case of authors. Performers have a right to the integrity of the performance and a right to name (to be associated with the performance as its performer by name, under a pseudonym, or to remain anonymous).

The right to the integrity of the performance is linked to s. 28.2(1) of the Copyright Act which sets forth that this right is only infringed if the performance is to the prejudice of its performer’s honour or reputation (a) distorted, mutilated or otherwise modified; or (b) used in association with a product, service, cause or institution.

The right to name is severely limited by the modifier to the effect that such right is only recognized if “it is reasonable in the circumstances.” A right that is subject to someone else determining whether its exercise is reasonable in the circumstances is not really a right.

Moral rights have been treated in a peculiar way in Canada. It’s not that these rights don’t exist here at all. It’s that they’ve never appeared to be anything more than an afterthought. Not only are they seldom used or debated, even the structure of the Copyright Act itself does not clearly address the issue of legal context of moral rights, specifically the relation between moral rights and fair dealing.

On the one hand, we witness uncontrolled expansion of fair dealing and the so-called “user rights”. On the other hand, the plain reading of the Copyright Act makes it clear that fair dealing provisions only excuse what would have otherwise been an “infringement of copyright”, whereas moral rights fall outside the definition of copyright.

Copyright is defined in s. 2 of the Copyright Act as a collection of rights described in sections 3, 15, 26, 18 and 21. Moral rights are defined in the same s. 2 of the Act as a collection of rights described in sections 14.1(1) and 17.1(1). Furthermore, infringements of copyright are dealt with in s. 27 of the Act, whereas infringements of moral rights are dealt with in s. 28 of the Act.

So going back to fair dealing, the wording of the fair dealing provisions of sections 29 – 32.2 is such that it only renders certain acts in connection with works and other subject matter “not an infringement of copyright.” Logically, this means that if such acts also infringe moral rights, then fair dealing provisions will not save the person who so used the works or such subject matter.

Furthermore, it would not be unreasonable to conclude that no use that constitutes infringement of moral rights can also be “fair” to satisfy the requirements of ss. 29 – 32.2 and the CCH factors.

Those authors and performers who are rightfully upset about curtailment of their rights to control their works and performances through expansion of fair dealing should really have a look at moral rights as a weapon to fight against the injustice.

As with moral rights of authors, moral rights of performers can’t be assigned but can be waived in Canada (s. 17.1(2)). Thus, any new performance that occurs after the Copyright Modernization Act comes into force will allow performers to claim moral rights to such performance, unless that right has been waived. What this means is that producers, recording companies and other users of performances will want to resign their agreements with performers to address the issue of moral rights.

A huge problem exists with the wording of s. 17.1(1). It only recognizes moral rights of performers in cases “referred to in subsections 15(2.1) and (2.2)”. As I wrote in my comments about new subsections in s. 15 of the Copyright Act, s. 15(2.1) gives protection to performances if the performer or the performance has a connection to Canada, while s. 15(2.2) gives protection to performances if the performer or the performance has a connection to the WIPO Performances and Phonograms Treaty (WPPT).

The plain reading of s. 17.1(1) then is that moral rights of performers will not be recognized in cases where the performer or the performance has a connection to a Rome Convention country (as they are referred to in s. 15(2) of the Copyright Act.)

This is a direct violation of Canada’s obligations under the Rome Convention, according to which Canada undertook to grant national treatment to performers and performances that have a connection to any Rome Convention country. Granted, as of July 23, 2012, there are not very many countries that are members to the Rome Convention but not to the WPPT. Just the following ones: Algeria, Andorra, Barbados, Bolivia, Brazil, Cape Verde, Congo, Dominica, Fiji, Iceland, Israel, Lebanon, Lesotho, Liberia, Niger, Nigeria, Norway, Syria, Venezuela, and Viet Nam.

According to the Rome Convention, national regime means treatment accorded by the domestic law of Canada to Canadian performers. By denying recognition of performers’ moral rights of Algerians, Andorrans, Barbadians, Bolivians, Brazilians, Cape Verdeans, Congolese, Dominicans, Fijians, Icelanders, Israelis, Lebanese, Lesothans, Liberian, Nigerien, Nigerian, Norwegian, Syrian, Venezuelan and Vietnamese, Canada will not be granting national treatment to such respectable performers in violation of Canada’s obligations under the Rome Convention.

I may fool around in my blog about it, but seriously, how many of our MPs have actually read the Bill for what it stands, as opposed to whether their rhetoric could add a couple of votes in the next election? Or is Canada planning to denounce its membership in the Rome Convention?