Copyright Modernization Act, SC 2012, c 20.

(1) This is an amending Act to the Copyright Act (see below). Section 31.1 expands the exemption granted by section 2.4(1)(b) of the Copyright Act and is essentially a codification of the holdings from SOCAN v CAIP (see below). Section 31.1(1) states that ISPs, provided that they are content neutral, cannot be held liable by providing any means for Internet access. The fact that “any means” for telecommunication is used instead of “the means” necessary for telecommunication, which appears in section  2.4(1)(b), signifies that this provision is intended to cover a wider range of intermediaries that provide access to third party content such as blogging, video and social networking websites. Moreover, whereas section 2.4(1)(b) is only applicable in cases where the intermediary is involved in the communication of copyright materials, section 31.1(1) covers both communication and reproduction of those materials. 

(2) The protection granted by section 31.1 also applies to hosting and caching activities. By virtue of sections 31.1(2) and 31.1(4), ISPs are protected from copyright infringement as a result of caching or other “incidental” acts that provide more efficient Internet services.  Further, under section 31.1(4), Online platforms and other network service providers are immune from copyright liability related to hosting unless they know the content provider has been found by a court to infringe copyright. One exception to section 31.1 exists however; it is not available to intermediaries whose primary function is to enable copyright infringement (see section 27(2.3) below).

(3) Another key provision this Act sets out is the “notice and notice” regime. Since 2000, many major ISPs have successfully dealt with copyright infringement claims using the informal notice and notice system put in place by the Canadian Association of Internet Providers (CAIP) and the music and cable industry. Therefore, sections 41.25 – 41.27 codified a pre-existing system already familiar to major ISPs. Under the notice and notice regime, a copyright holder can report an infringement by sending a notice to the ISP. The notice must be in writing and include the claimant’s name and address, the material relating to the alleged infringement, the claimant’s interest in the copyright, the type of infringement as well as the location and time of the alleged infringement. Once the ISP receives the notice, it must promptly forward it to the accused subscriber. ISPs are also required to maintain a record of the user who owns the electronic location at which the alleged copyright infringement occurred. This record must be retained for six months but can be extended to one year if an action is commenced. Where the ISP fails to carry out its obligations, it will be liable for statutory damages ranging from $5,000 to $10,000.  

(4) Section 41.25(b) and (c) extend the notice and notice regime beyond ISPs to include content hosts (as defined in section 31(4)) and search engines, which the Act refers to as "information location tools". Section 41.27 additionally limits the remedies available against any search engine for potential copyright infringement arising from its automated indexing of copyrighted material for discoverability purposes. Should any such liability arise, a rights holder cuold only be granted injunctive relief, as long as search engines are content neutral and not guilty of enabling infringement (see section 27(2.3) below).

(5) One area the Act is unclear about is the circumstance under which various ISPs will be held liable for authorizing copyright infringement. The Supreme Court of Canada's decision in SOCAN v CAIP (see below) recognized that authorization might, in theory, constitute a basis for ISP liability in copyright infringement despite the section 2.4(1)(b). Namely, if an ISP has notice of a potential copyright infringement carried out by its customer and does not take remedial action, it might be held to have authorized the infringment, incurring secondary liability for those actions. However, the SOCAN v CAIP decision did not impose such liability, recognizing that Parliament might be better placed to detail the parameters of any such liability regime. However, the Copyright Modernization Act remains largely silent on the limits of the ISP liability limitations addressed in the SOCAN v CAIP decision. It therefore remains to be seen whether forwarding a notice to the content provider will be sufficient to meet the “remedial action” requirement or whether courts will require more from ISPs seeking to avoid liability as an authorizer.
(6) The Copyright Modernization Act introduces a new basis for intermediary liability. According to section 27(2.3), an intermediary can incur secondary liability if its service is primarily intended for enabling copyright infringement. As noted above, this new basis of liability circumscribes the outer limits of a number of the intermidiary liability and remedy limitation regimes introduced by the Copyright Modernization Act. Specifically, search engines (41.27(4)), application layer intermediaries such as blogging sites (31.1(6)) and ISPs facing liability for activities outside section 2.4(1)(b) are unable to rely on their respective liability limitation regimes if they are found to be 'enablers' of infringement. What constitute as “enabling” will be determined in light of numerous factors such as how the service was marketed by the ISP and whether it has other functions aside from enabling acts of copyright infringement.

(7) Arguably, the Copyright Modernization Act is parliament's attempt to provide a complete framework for intermediary liability in relation to copyright infringement. In this regard, the new enabling provisions encode the conditions that might trigger secondary liability for entities acting as neutral intermediaries and otherwise falling within the various liability and remedy limitation regimes found in the Act. This might include the authorization regime that the Supreme Court of Canada called upon parliament to encode in its SOCAN v CAIP decision, as well as other potential bases of secondary intermediary liability such inducement or vicarious liability, which Canadian courts have not extensivly explored in the context of intermediaries.