COPYRIGHT REGULATIONS

Book Importation Regulations

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REGULATIONS
Copyright Act

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P.C. 1999-1350 28 July, 1999

His Excellency the Governor General in Council, on the recommendation of the Minister of Industry, pursuant to the definition "exclusive distributor"^a in section on 2, section 2.6^b subsections 27.1(5)^c and (6)^c and section 62^d of the Copyright Act, hereby makes the annexed Book Importation Regulations.

^a S.C. 1997, c. 24, s. 1(5)
^b S.C. 1997, c. 24, s. 2
^c S.C. 1997, c. 24, s. 15
^d S.C. 1997, c. 24, s. 37(2)

1. The definitions in this section apply in these Regulations.

"Act" means the Copyright Act. (Loi)

"bookseller" means an individual, firm or corporation that is directly engaged in the sale of books in Canada for at least 30 consecutive days in a year and

(a) whose floor space is open to the public and is located on premises consisting of floor space, including book shelves and customer aisles, of an area of at least 183 m² (600 sq. ft.); or

(b) whose floor space is not open to the public and that derives 50% of his or her or its gross revenues from the sale of books. (libraire)

"Canadian edition" means an edition of a book that is published under an agreement conferring a separate right of reproduction for the Canadian market, and that is made available in Canada by a publisher in Canada. (édition canadienne)

"catalogue" means a publication in printed, electronic or micro-fiche form that

(a) is updated at least once a year;

(b) lists all book titles currently in print that are available from at least one exclusive distributor; and

(c) identifies the title, the International Standard Book Number, the exclusive distributor, the author and the list price in Canada for each book listed. (catalogue)

"current exchange rate" means the rate of exchange prevailing on the day on which a transaction takes place, as ascertained from a Canadian bank. (taux de change courant)

"format" in relation to a book, means

(a) the type or quality of binding;

(b) the typeface or size of print;

(c) the type or quality of paper; or

(d) the content, including whether the book is abridged or unabridged, or illustrated. (format)

"holiday" means a Saturday or a holiday as defined in subsection 35(1) of the Interpretation Act. (jour férié)

"list price" means the price for a book that is set out in a catalogue or printed on the cover or jacket of the book. (prix de catalogue)

"remaindered book" means a book

(a) that is sold by the publisher for less than the cost of paper, printing and binding; or

(b) that is sold at a reduced price by the publisher and for which the author or copyright owner receives no royalty. (livre soldé)

"retailer" means a person who sells books in the course of operating a business, but does not include an exclusive distributor or a book publisher. (détaillant)

"special order" means an order for a copy of a book that a bookseller or a retailer other than a bookseller does not have in stock and that the bookseller or retailer orders at the request of a customer. (commande spéciale)

2. (1) These Regulations apply to

(a) English-language and French-language books that are imported into Canada and for which separate and distinct Canadian territorial rights have been created or contracted; and

(b) Canadian editions that are imported into Canada.

(2) For greater certainty, these Regulations apply to books referred to in subsection (1) that are added, after the coming into force of these Regulations, to an order placed before the coming into force of these Regulations.

(3) For greater certainty, these Regulations shall not be construed as authorizing anyone to do or to omit to do an act that would constitute an infringement of copyright under subsection 27(2) of the Act.

3. (1) The computation of time under these Regulations is governed by sections 26 to 30 of the Interpretation Act.

(2) If a period of less than seven days is provided for in these Regulations, a day that is a holiday shall not be included in computing the period.

(3) If a period for the doing of a thing is provided for in these Regulations and is expressed to end on a specified day, the period ends at the close of business on the specified day.

4. (1) An exclusive distributor, a copyright owner or an exclusive licensee shall give the notice referred to in subsection 27.1(5) of the Act to a person referred to in subsection 27.1(1) or (2) of the Act before the person places an order, in the following manner:

(a) in the case of a retailer other than a bookseller, in writing in accordance with subsection (2); and

(b) in the case of a bookseller, library or other institution established or conducted for profit that maintains a collection of documents, by setting out the fact that there is an exclusive distributor of the book in the latest edition of

(i) the Canadian Telebook Agency Microfiche and Books in Print Plus -- Canadian Edition, published by R.R. Bowker, if the book is an English-language book, and the Banque de titres de langue française, if the book is a French-language book, or

(ii) a catalogue supplied by the exclusive distributor, copyright owner or exclusive licensee to the bookseller, library or other institution, at the request of, and in the form requested by, the bookseller, library or other institution.

(2) The notice referred to in paragraph (1)(a) shall be sent to the retailer at the retailer's last known address by personal delivery, by mail, or by facsimile or other electronic means.

(3) Instead of the notice referred to in subsection (1), an exclusive distributor that represents all of the titles published by a particular publisher may send a notice to that effect to a person referred to in subsection 27(1) or (2) of the Act, at that person's last known address, by personal delivery, by mail, or by facsimile or other electronic means, before the person places an order.

(4) A notice given in accordance with subsection (1) or (3) is valid and subsisting in respect of any title covered by the notice until the notice is revoked or amended by the exclusive distributor, copyright owner or exclusive licensee, as the case may be.

(5) The notice referred to in subsection (2) or (3) is deemed to have been received by the retailer, if it is

(a) delivered personally, on the day of delivery;

(b) sent by mail, on the tenth day after the day on which the notice was mailed; or

(c) sent by facsimile or other electronic means, on the date and at the time indicated by the sending apparatus.

5. (1) For the purpose of section 2.6 of the Act, where an order for imported books is placed, the following distribution criteria are established:

(a) an exclusive distributor shall

(i) ship the order to the person who placed the order

(A) for books imported into Canada and in stock in Canada,

(I) within 12 months after the coming into force of these Regulations, no later than five days after the day on which the order is received from the person who placed the order, (II) after the end of the 12-month period referred to in subclause (I), no later than three days after the day on which the order is received from the person who placed the order, in the case of English-language books, and (III) after the end of the 12-month period referred to in subclause (I), no later than five days after the day on which the order is received from the person who placed the order, in the case of French-language books,

(B) for books imported from the United States and not in stock in Canada,

(I) within 12 months after the coming into force of these Regulations, no later than 15 days after the day on which the order is received from the person who placed the order, and (II) after the end of the 12-month period referred to in subclause (I), no later than 12 days after the day on which the order is received from the person who placed the order,

(C) for books imported from Europe and not in stock in Canada,

(I) within 12 months after the coming into force of these Regulations, no later than 35 days after the day on which the order is received from the person who placed the order, in the case of English-language books, (II) after the end of the 12-month period referred to in subclause (I), no later than 30 days after the day on which the order is received from the person who placed the order, in the case of English-language books, and (III) no later than 60 days after the day on which the order is received from the person who placed the order, in the case of French-language books, and

(D) for books imported from any other country and not in stock in Canada,

(I) within 12 months after the coming into force of these Regulations, no later than 60 days after the day on which the order is received from the person who placed the order, and (II) after the end of the 12-month period referred to in subclause (I), no later than 50 days after the day on which the order is received from the person who placed the order,

(ii) provide the book in the format requested by the person who placed the order, if the format exists, and (iii) subject to any law of any province with respect to prices concerning the distribution of books, provide the book at a price no greater than

(A) if the book is imported from the United States, the list price in the United States, plus the current exchange rate, plus 10% of the price after conversion, minus any applicable discounts, or (B) if the book is imported from a country in Europe or any other country, the list price in the country from which the book is imported, plus the current exchange rate, plus 15% of the price after conversion, minus any applicable discounts; and

(b) if the person who placed the order so requests, an exclusive distributor shall confirm to that person whether the order can be filled

(i) if the confirmation is made by telephone, no later than two days after the day on which the order is placed, (ii) if the confirmation is sent by mail or facsimile, no later than five days after the day on which the order is placed, and (iii) if the confirmation is sent by electronic means other than facsimile,

(A) where the order is placed within 12 months after the coming into force of these Regulations, no later than two days after the day on which the order is placed, and (B) where the order is placed after the end of the 12-month period referred to in clause (A), no later than the day after the day on which the order is placed.

(2) In the case of books provided to libraries, the applicable discounts referred to in clause (1)(a)(iii)(A) shall be based on generally prevailing market conditions in North America.

(3) Subsections (1) and (2) apply to an exclusive distributor of a book in paperbound format only after the end of 12 months after the book first becomes available in that format in North America. If the exclusive distributor provides the book in that format before the end of that period, subsections (1) and (2) shall apply.

(4) If an exclusive distributor is unable to meet the criteria for an order set out in subsections (1) and (2), the person who placed the order may import the book through a person other than the exclusive distributor.

6. (1) For the purpose of section 2.6 of the Act, the following distribution criteria are established for Canadian editions:

(a) the exclusive distributor shall make sufficient copies of the Canadian edition available in Canada; and (b) before an order is placed, the Canadian edition must be

(i) identified as a Canadian edition

(A) on the cover or jacket of the book, (B) in the latest edition of the Canadian Telebook Agency Microfiche and of Books in Print Plus -- Canadian Edition, published by R.R. Bowker, if the edition is an English-language edition, and in the latest edition of the Banque de titres de langue française, if the edition is a French-language edition, or (C) in the latest edition of a catalogue supplied by the exclusive distributor, copyright owner or exclusive licensee to the bookseller, library or other institution, at the request of, and in the form requested by, the bookseller, library or other institution, and

(ii) listed

(A) in the latest edition of the Canadian Telebook Agency Microfiche and of Books in Print Plus -- Canadian Edition, published by R.R. Bowker, if the edition is an English-language edition, and in the latest edition of the Banque de titres de langue française, if the edition is a French-language edition, or (B) in the latest edition of a catalogue supplied by the exclusive distributor, copyright owner or exclusive licensee to the bookseller, library or other institution, at the request of, and in the form requested by, the bookseller, library or other institution.

(2) If an exclusive distributor is unable to meet the criteria for an order set out in subsection (1) the person who placed the order may import the book through a person other than the exclusive distributor.

7. For the purpose of subsection 27.1(6) of the Act, a book may be imported if

(a) the book is marked as a remaindered book or the original foreign publisher has given notice to the exclusive distributor, if any, that the book has been remaindered, and the book is not sold in Canada before the end of 60 days after the day on which it was first offered for sale as a remaindered book by the original foreign publisher in the country from which the book is imported;

(b) the book is marked as a damaged book by the importer or the retailer; or

(c) the book is imported solely for the purpose of re-export, and the importer is able to provide evidence, on request, that an order for re-export has been made for the book before its importation.

8. For the purpose of subsection 27.1(6) of the Act, a textbook may be imported if

(a) at the time of importation, the importer provides documentation such as a certificate or an invoice establishing that the textbook is a used textbook;

(b) the textbook is to be offered for sale or distribution in Canada as a used textbook; and

(c) the textbook is of a scientific, technical or scholarly nature and is for use within an educational institution or an educational body established or conducted for profit.

9. (1) For the purpose of subsection 27.1(6) of the Act, a book that is the subject of a special order may be imported through a person other than the exclusive distributor if the exclusive distributor is unable to fill the order within the time specified by the person who placed the order.

(2) The exclusive distributor shall confirm within 24 hours after the special order is received whether or not the order can be filled within the time specified by the person who placed the order.

10. A library may import leased books through a person other than an exclusive distributor.

11. These Regulations come into force on September 1, 1999.

Description

Bill C-32, An Act to amend the Copyright Act, received Royal Assent on April 25, 1997. This bill introduced additional restrictions on the parallel importation of printed books. Parallel importation refers to books which were legitimately produced in their country of origin but which have been imported into Canada without the consent of the rights owner in Canada. Bill C-32 contains provisions which greatly increase the ability of rights holders in Canada to protect their exclusive distribution rights in the Canadian market. Previously, the Act allowed only copyright owners and exclusive licensees to limit the parallel importation of printed books. Bill C-32 extends this right to exclusive distributors. Exclusive distributors are those who have received acquired rights of exclusive distribution in Canada but who do not have property right in the book, e.g. they do not have a right to authorize the reproduction of the book.

As a result of the amendments made in Bill C-32, there are two new provisions in the Copyright Act which allow rights holders in Canada to protect their exclusive distribution rights in the Canadian market. One gives the rights holder certain abilities to sue persons after a book has been imported without authorization.

The other allows the rights holder and the exclusive distributor to obtain a court order requiring the detention of particular shipments of parallel imports by customs officials.

In order to protect booksellers, libraries and consumers against the possibility that increased market exclusivity will result in excessive book prices or lower standards of service, the Copyright Act confers specific regulatory power to the Governor in Council to establish the criteria or standards exclusive distributors are required to adhere to in order to benefit from the additional protection they have under the regime. The Regulations set out these standards which include: the form of the notice stating that there is an exclusive distributor for a particular book, confirmation time for orders, delivery time which the exclusive distributor must meet, and price differential. In addition, there are rules for remaindered books, damaged books, books intended for re-export, special orders and leased books. It was decided that these criteria and standards could be best dealt with through regulations so that they can be easily modified and also, because they necessarily contain extensive details.

The Regulations specify the categories of books to be partially or wholly excluded from the parallel importation provisions. The Regulations allow for the importation of used textbooks. If restrictions on the importation of used textbooks are ever warranted, the government will consult with all interested parties before amending the Regulations to implement any such restrictions.

These Regulations have been developed to reflect, as closely as possible, competitive market conditions for the distribution of imported books, consistent with voluntary industry guidelines that were negotiated by industry stakeholders. Recourse to the provisions in the Copyright Act against parallel importations of books will only be made available to exclusive distributors in those circumstances where mark-up beyond the list price of a book is no greater than a prescribed percentage, which varies according to whether the books are imported from one of three areas: the U.S., Europe or the rest of the world. These percentages correspond to the average actual costs currently paid by book importers for transportation and related expenses -- including shipping, handling and receiving, inventory, financial reporting, general overhead and sales and marketing -- for imports from each of the three areas. These simple percentage marks-ups ensure that importers, libraries and book retailers will have a straightforward mechanism with which to evaluate costs and that they will thereby be protected against unfair pricing practices.

Alternatives

The Act requires Regulations in order to extend parallel importation provisions to exclusive distributors. Without these Regulations, no person could qualify as an "exclusive distributor", and exclusive distributors would not be entitled to the new protection against parallel imports provided in the amendments made by Bill C-32.

Benefits and Costs

Exclusive distributors pay for the right to distribute books in Canada, and the amount of the payment may be based on an expectation of a certain volume of sales. The provisions in the Act limiting parallel importation give exclusive distributors greater commercial certainty with respect to the rights they have purchased. Without these Regulations, the parallel importation provisions of the Act would be ineffective, and those with exclusive distribution contracts would not in all cases derive the full benefits of their distribution contracts. This would be detrimental to the Canadian publishing sector, as a whole.

As a result of the Regulations, there may be additional costs to retailers and institutional buyers. To protect against excessive prices, the regulation requires that exclusive distributors meet certain standards with regard to pricing, and these are based on mark-ups reflecting prevailing market conditions.

There will be no additional costs to the government due to the implementation of these Regulations.

Consultation

Consultations with the major interested parties (The Association of Canadian Publishers, The Canadian Publishers' Council, Canadian Booksellers Association, Canadian Library Association, Book and Periodical Council, Wholesalers, Canadian Telebook Agency, Association Nationale des Éditeurs de Livres, Association des Libraires du Québec) have taken place over the last two years. These parties met on a number of occasions to negotiate the terms of the Regulations and were provided with different drafts of these Regulations.

In addition, there were consultations with Western Canadian College Stores Association, Eastern Campus Booksellers, Canadian Federation of Students, Canadian Alliance of Student Associations and Follett Campus Resources on the issue of used textbooks.

These Regulations and accompanying Regulatory Impact Analysis Statement (RIAS) were prepublished in the January 30, 1999 issue of the Canada Gazette, Part I. Interested parties were invited to make any representations concerning these Regulations within 45 days of the date of prepublication.

Comments were received from The Canadian Publishers' Council, the Association of Canadian Publishers, l'Association des distributeurs exclusifs de livres en langue française, The Writers' Union of Canada, Canadian Library Association, Book Depot, The Ontario Library Association, McNally Robinson, and Lang Michener (for Follett Campus Resources).

While views remained divergent on certain issues, the resulting Regulations represent a reasonable compromise.

Minor modifications (drafting issues) were made to the Regulations in order to better reflect the agreement reached by the parties during the consultations or to clarify the intention of the Government:

Notice of exclusive distributor: section 27.1(5) states that no exclusive distributor is entitled to a remedy unless, before the infringement occurred, notice has been given within the prescribed time and in the prescribed manner described in the Regulations. Section 4 of the Regulations states that the exclusive distributor shall give this notice (in the case of a bookseller, library or other institution) by setting out the fact that there is an exclusive distributor of the book in the publications mentioned in paragraph (i), a catalogue (paragraph (ii)) or the Banque de titres de langue française (paragraph (iii)). In response to concerns expressed by publishers and libraries, section 4 was modified to clarify that the catalogue mentioned in paragraph (ii) will be supplied at the request of a bookseller, library or other institution.

Notice of exclusive distributor: the title "Canadian Telebook Agency Microfiche and Ordering System" and "Books in Print Plus on Disc - Canadian Edition" were changed to their official titles "Canadian Telebook Agency Microfiche" and "Books in Print Plus - Canadian Edition".

Application: section 5(5) and 6(3) stated: "for greater certainty, this section shall not be constructed as authorizing anyone to do or to omit to do an act that would constitute an infringement of copyright under subsection 27(2) of the Act". As this statement applies to the regulation in its entirety, it was moved to the "application" section.

Imported books: in section 5(1)(iii) the words "minus any applicable discounts" should have appeared in paragraph (B) as it does in paragraph (A), and was therefore added to paragraph (B).

Imported books: section 5(1)(iii) was also modified in order to better reflect the intention of the government not to interfere with laws of any province with respect to prices concerning the distribution of books.

Canadian edition: in section 6(1)(b) the phrase "before an order can be placed" is replaced by "before an order is placed" to reflect the intention of the parties.

Remaindered and other books: in response to concerns expressed by Book Depot to the effect that there is no incentive for a foreign publisher to respect the conditions set in the Regulations, the word "or" was added in section 7(a) between "...marked as a remaindered book" and "the original foreign publisher has given notice...". For the same reason, it is specified in paragraph (b) that the book is marked as damaged book "by the importer or the retailer".

Special orders: in section 9(2), the calculation of the 24 hours is from the receipt of the special order rather than from the time the special order is placed as previously stated. This is to conform to the intention of the parties and to other calculations of time stated in the Regulations.

These modifications do not in any way change the policy formulated by Industry Canada and Canadian Heritage.

Other comments were received from stakeholders; however, after careful consideration, they did not result in any changes in the Regulations for the following reasons:

- they were drafting issues not required for better understanding of the Regulations;

- they exceeded the regulatory power stated in Copyright Act; and,

- they were contrary to the policy developed by Industry Canada and Canadian Heritage, in consultation with the stakeholders.

Compliance and Enforcement

Compliance and enforcement mechanisms are not required. The exclusive distributor who does not respect the standards prescribed in these Regulations will not benefit from the additional protection offered by the parallel importation regime. On the other hand, it is an infringement of copyright in a book for any person to import a book in a manner contrary to what is stipulated in the Copyright Act and these Regulations.