Canadian Supreme Court Delivers Several Leading Copyright Decisions

On Thursday, July 12, 2012, the Supreme Court of Canada (Supreme Court) released five decisions regarding existing or proposed Copyright Board tariffs pursuant to the Copyright Act. The Court’s decision to hear the five appeals together was reported earlier in E-TIPS® (http://dww.local/?p=2858). (i) Alberta (Education) v Canadian Copyright Licensing Agency (Access Copyright), 2012 SCC 37 School boards across the country entered into royalty agreements with Access Copyright, the Canadian Copyright Licensing Agency, which collects royalties on photocopies of portions of textbooks or other published works made in elementary schools and high schools, on behalf of copyright owners. Royalties were paid on a per-student basis, rather than the number of pages or works copied. To determine the terms of renewal of the royalty agreements, a study of four different categories of copying was conducted. Access Copyright agreed that three of the categories, which related to copies teachers made for themselves or at the request of a student were fair dealing (and would therefore not be considered for the royalty agreements). However, the parties disagreed whether copies made by teachers for students as a complement to their main textbook were covered by fair dealing. The Copyright Board of Canada (Board) concluded that this use was not fair dealing; the Federal Court of Appeal upheld the decision on judicial review, stating that the Board’s decision was reasonable. By a 5-4 majority, the Supreme Court reversed these decisions, reaffirming the test set out in CCH Canadian Ltd. v Law Society of Upper Canada, 2004 SCC 13, [2004] 1 SCR 339 (CCH case) (see the E-TIPS® mini-article on the CCH case here), and held that these copies were made under the “research or private study” fair dealing exception. The fact that the teachers were making the photocopies (rather than the students themselves) did not amount to a separate purpose from the students’ research and private study: “Instruction and research/private study are, in the school context, tautological” (at paragraph 23). (ii) Entertainment Software Association v Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 34 The makers of video games, represented by the Entertainment Software Association, negotiate contracts setting out reproduction rights and royalties related to the use of music incorporated into video games before the games are sold to the public. The Society of Composers, Authors and Music Publishers of Canada (SOCAN), which collects royalties on the use of music on behalf of member copyright owners, claimed that it retained rights over the music when games were sold over the Internet instead of in a store, and sought to collect royalties when games were sold online. Specifically, SOCAN claimed that these sales amounted to the use of the right of “communication” to the public by telecommunication and that because this “communication” right was different from the rights granted for reproduction, an additional royalty was due. The Board agreed with SOCAN, and found that video games sold over the Internet were subject to a separate, “communication” tariff for the downloading of musical works. The Board’s decision was upheld by the Federal Court of Appeal. By a 5-4 majority the Supreme Court disagreed, reversing these decisions and holding that the downloading of videogames by the public did not amount to “communication” to the public. According to the decision, “downloading” is a form of “copying”. The downloaded copy is identical to store-bought copies and the Board had erred by failing to apply the principle of technological neutrality. In addition, permitting fees for games sold over the Internet would allow copyright owners to “double-dip”. Streaming, on the other hand, is more similar to a broadcast or a performance, said the majority. Justice Rothstein, writing in dissent, found that technological neutrality, although desirable, is not a statutory requirement that would permit the pre-emption of the rights set out in the language of the Copyright Act. “Downloading” is a “communication”, which is an independent and distinct right from copying. Accordingly, Justice Rothstein would have upheld the Board’s decision. (iii) Re: Sound v Motion Picture Theatre Associations of Canada, 2012 SCC 38 Re: Sound is a collective agency that collects royalties for the performance in public or communication to the public by telecommunication of music sound recordings. Re: Sound filed two tariff proposals with the Board: Tariffs 7 and 9. Tariff 7 would have allowed royalties to be paid for the use of sound recordings used in movies shown in movie theatres. Tariff 9 covered the use of sound recordings broadcast on television. The issue in this case was whether the exclusion of “any soundtrack of a cinematographic work where it accompanies the cinematographic work” in the definition of “sound recording” in section 2 of the Copyright Act included pre-existing sound recordings that are incorporated into a soundtrack. If such pre-existing sound recordings were included the definition of “sound recording” (that is, they were excluded from the exclusion), then the tariffs would have to be approved. The Board decided that the pre-existing sound recordings were “sound recordings”, and thus refused to approve the tariffs. The Federal Court of Appeal upheld the decision. The Supreme Court unanimously affirmed the decisions below. Based on the meaning of the words of section 2, the legislative history of the Copyright Act, and on international and comparative law, the Supreme Court held that it is clear that the pre-existing sound recordings were “sound recordings” within the meaning of the legislation. (iv) Rogers Communications Inc v Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 35 Rogers (and other telecommunications businesses) offer online music services whereby users can download or stream music. SOCAN sought a tariff for this distribution of music over the Internet. The issue in this appeal was whether providing music by making it available for downloading or streaming was a communication “to the public” within the meaning of subsection 3(1)(f) of the Copyright Act. The Board’s findings that these actions were communications “to the public” and establishing the tariffs were affirmed by the Federal Court of Appeal. By an 8-1 majority, the decision was reversed in part by the Supreme Court. Streaming was found to be a communication “to the public”. However, in accordance with the co-issued decision in the Entertainment Software Association case (see ii above), making available for “downloading” is not a communication “to the public”. The Supreme Court characterized the issue as a question of law, and the Board’s decision was to be reviewed on the standard of correctness. The CCH case, supra, cannot be read to stand for the rule that a point-to-point transmission (or a series of point-to-point transmissions) is necessarily a private transaction (or a series of private transactions); the transmissions must be examined in context to determine the true nature of the communication activity. In this case, the “necessary implication of [Roger’s business model] is that there will be a ‘series of repeated ... transmissions of the same work to numerous different recipients”, (CCH case at paragraph 78) amounting to a communication “to the public”. (v) Society of Composers, Authors and Music Publishers of Canada v Bell Canada, 2012 SCC 36 Bell Canada sells music online and, as part of this service, 30 to 90 seconds of preview is offered on each song offered for sale. SOCAN sought a tariff for these previews. The issue in this case was whether these previews constituted fair dealing for which no royalties were due. Holding that this activity was fair dealing, the Board refused to certify the tariff and the Federal Court of Appeal affirmed the Board’s decision. The Supreme Court unanimously affirmed the decisions below and held that previews are fair dealing as “research” and meet the factors enunciated in the CCH case, supra. In summary, “consumers used the previews for the purpose of conducting research to identify which music to purchase, purchases which trigger dissemination of musical works and compensation for their creators, both of which are outcomes the Act seeks to encourage” (at paragraph 30). Summary by: Cheryl Cheung