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The Supreme Court of Canada copyright pentalogy

Once upon a sunny day in July, in a galaxy not so far away, the highest court in Canada released five decisions dealing with copyright law.  An unprecedented blockbuster in the world of Canadian copyright law at the very least, the five recent decisions of the Supreme Court of Canada shed insight on how the Court views copyright law in the digital era and expands on the Court’s generous interpretation of user rights (i.e. exceptions to copyright infringement).

The Court decided whether video games purchased online are communications to the public, whether Internet streams are communications to the public, whether free previews of online music are a form of research, whether school-based photocopying is part of private study or research, and whether musical works in a soundtrack require an additional tariff be paid for each broadcast. This article provides a brief summary of each of the five decisions.2012 Sept 18 JAM-MGF_Supreme Court of Canada copyright pentalogy

Entertainment Software Association (ESA) v. Society of Composers, Authors and Music Publishers Canada (SOCAN), 2012 SCC 34

SOCAN, a collective society that administers the performing and communication rights of composers, authors and music publishers in Canada, applied to the Copyright Board for certification of a tariff on the communication to the public by telecommunication of musical works over the Internet, including copies of musical works contained in video games sold via download over the Internet.

Makers of video game software negotiate royalties for reproduction of the musical works contained in the video games before the games are sold to the public.  The Copyright Board and Federal Court of Appeal both agreed that the download of a musical work contained within a video game represented a communication of that work to the public by telecommunication, meaning that an additional royalty was payable in respect of the download of such video games.  A majority of the Supreme Court disagreed, relying on the historic distinction between reproduction-based rights and performance-based rights (including the right to communicate a work to the public by telecommunication) to hold that a download of a video game containing a musical work is not a communication to the public by telecommunication of that work.  The majority also relied on the principle of technological neutrality, finding that there was no practical difference between purchasing a copy of the video game in a store versus downloading a copy.

Rogers Communications Inc. v. Society of Composers, Authors and Music Publishers of Canada (SOCAN), 2012 SCC 35

SOCAN applied for a tariff on music files that are downloaded or streamed over the Internet. A stream is a data transmission that results in a temporary copy of the data on a user’s hard drive. Following the decision in ESA v. SOCAN summarized above, the Supreme Court confirmed that a download of a file containing a musical work is not a communication to the public by telecommunication.  However, with respect to music streamed over the Internet at the request of individual users, the Court determined that such transmissions were communications to the public by telecommunication.

Rogers had argued that each stream was a transmission of a single copy of a work to a single individual and is therefore not a communication to the public. However, the Supreme Court decided that the transmissions were targeted to an aggregation of individual users, taking the transmissions outside of the realm of individual point-to-point communications and rendering them communications to the public.

Moreover, the fact that the transmissions were initiated by users, rather than being pushed out to users, was not sufficient to make the transmissions private.  The entire business model required that many users access the works to generate a profit, further emphasizing that multiple transmissions of each work were contemplated.

The Court emphasized that if each transmission requested by an individual was analyzed in isolation, then all interactive communications would be excluded from the umbrella of the right to communicate a work to the public. As in the ESA decision above, such a rule was rejected for not being technology-neutral and the Supreme Court has long held that the Copyright Act should, whenever possible, be interpreted such that the rights contained therein do not depend on the form of technology.

Finally, the Supreme Court changed the standard of review for decisions of the Copyright Board on points of law to a correctness standard from a reasonableness standard. This means that a Court will reverse a Copyright Board decision if the decision is legally incorrect, as opposed to if the decision is unreasonable. The Court made it clear that this change only applies to decisions of the Copyright Board and the Court left a determination of the appropriate standard of review for other intellectual property tribunals to another day.

Society of Composers, Authors and Music Publishers of Canada (SOCAN) v. Bell Canada, 2012 SCC 36

SOCAN applied for a tariff on free previews used by consumers to decide whether to purchase a digital file containing a musical work.   The previews at issue were short extracts, usually 30 to 90 seconds, that were streamed to the users’ computer in a way such that no permanent copy of the preview was stored on the users’ computer.  A number of services that sell music online opposed the tariff, on the basis that previews were used by consumers for the purpose of researching which music files to purchase, which constitutes fair dealing under the Copyright Act.

Fair dealing allows users to engage in some activities that might otherwise amount to copyright infringement, and the Supreme Court of Canada has recently characterized such activities as “user’s rights”.  Reliance on the fair dealing exception requires both that the dealing be for one of the allowable purposes set forth in the Copyright Act, and that the dealing be “fair”.

In dismissing SOCAN’s appeal, the Supreme Court rejected SOCAN’s contention that “research” must be for a creative purpose, i.e. to establish facts and reach new conclusions.  The Court confirmed that in determining the purpose of the dealing, the proper perspective to be considered is that of the user; i.e., the consumer determining whether to purchase a musical work, not the service provider who makes the preview available.  With respect to the fairness of the dealing, the Court agreed with the Board that the purpose of providing the previews was primarily to facilitate the research purposes of the consumers.  Furthermore, no permanent copy of the preview was created, the preview was only a modest portion of the work as compared with downloading the entire work for repeated listening, and no reasonable alternative was available to allow consumers to decide whether or not to purchase the musical work.  The short previews did not compete with the musical work, and, in fact, increased the sale of such works. As a result, the Supreme Court rejected SOCAN’s application for a tariff.

Alberta (Education) v. Canadian Copyright Licensing Agency (Access Copyright), 2012 SCC 37

Access Copyright applied to the Copyright Board to certify a tariff on photocopies made in K-12 schools.  At issue in the appeal to the Supreme Court were copies of short excerpts from textbooks made by teachers for distribution to students as a complement to the main textbook used by the students.  Educators argued that these copies constituted fair dealing for the purpose of research or private study, and therefore such copies should be excluded from any tariff.

The Copyright Board found that such copies were made for the allowable purpose of research or private study, but nevertheless that the dealing considered in its entirety was not fair and was therefore subject to payment of a royalty.

A majority of the Supreme Court of Canada disagreed with the way the Copyright Board applied the test of assessing whether the dealing was “fair”.  In particular, the Copyright Board focused on the fact that the copies were made at the initiative of the teachers, rather than at the request of the students.  Therefore, the Copyright Board concluded that the predominant purpose for which the copies were made was that of the teacher, i.e. for instruction or non-private study, and found that this tended to make the copying unfair.

In contrast, while recognizing that copiers cannot disguise their true purpose by conflating it with the research or study purposes of the ultimate user of the materials, the Supreme Court found that the teacher’s purpose in making the copy was not separate from the students.   Teachers had no ulterior or commercial motive to provide the copies, nor did they have a completely separate purpose of instruction.   The Court found that students lacked expertise to request materials required for their own research or private study, and therefore relied on the guidance of their teachers.  Moreover, the Court also found that use of the materials as a group in class did not take the purpose for which the copies were made out of the realm of private study.  Although multiple copies of the same works were made, the copies amounted to only short extracts of the works copied.  In considering potential alternatives to the dealing, the Court did not agree that the purchase of additional books for each student was a realistic alternative to copying short excerpts to supplement student textbooks.   Having regard to such factors, a majority of the Supreme Court of Canada concluded that the Copyright Board’s determination that the dealing was unfair was unreasonable, and remitted the tariff back to the Board for reconsideration in view of the Court’s reasons.

Re:Sound v. Motion Picture Theatre Associations of Canada, 2012 SCC 38

Re:Sound, a collective society that collects equitable remuneration for the public performance of sound recordings on behalf of the performers and makers of those sound recordings, applied for tariffs on the performance in public or communication to the public by telecommunication of sound recordings in movies and television programs.

The proposed tariff was opposed on the basis that the definition of “sound recording” in the Copyright Act specifically “excludes any soundtrack of a cinematographic work where it accompanies the cinematographic work”. The argument is that if a musical work does not count as a “sound recording” when part of a soundtrack, then no tariff should be collected for the musical works when a movie or television program is broadcast. On this basis, the Copyright Board refused to certify the proposed tariffs.  That decision was upheld by both the Federal Court of Appeal and the Supreme Court of Canada, who agreed that the definition of “sound recording” in the Copyright Act specifically excludes the musical works forming part of the soundtrack of the cinematographic work where the musical works accompany the cinematographic work. So, for example, no tariff would be due to Re:Sound for each broadcast of a television show whose soundtrack included “Call Me Maybe” by Carly Rae Jepsen. However, the makers of the television show would still have to negotiate a license or pay a tariff to use the song initially.

By Jennifer A. Marles and Michael G. Fink

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