Five Supreme Court Copyright Decisions: Consumers 4.5 — Artists and Creators 0.5

CCA Bul­letin 11/12

July 17, 2012

Last Thurs­day, the Supreme Court deliv­ered five judg­ments which have a con­sid­er­able impact on the inter­pre­ta­tion of copy­right law in Canada. The Court’s deci­sions were based on the pre­vi­ous ver­sion of the Copy­right Act, Bill C-11 not yet hav­ing been adopted at the time of the hear­ing, last Decem­ber. The Court has reaf­firmed the exis­tence of “user’s rights” and the impor­tance of tak­ing a lib­eral inter­pre­ta­tion of what con­sti­tutes fair deal­ing. Both these aspects of the Supreme Court’s deci­sion, ini­tially stated in a 2004 deci­sion, have raised con­cerns domes­ti­cally and abroad from an eco­nomic per­spec­tive and have cre­ated con­tro­versy amongst legal experts and academics.

The notion of user’s rights mir­rors the government’s approach to C-11 and this sec­ond judg­ment, rein­forc­ing the Court’s pre­vi­ous deci­sion, will make life more dif­fi­cult for artists and cre­ators col­lec­tives and for all own­ers of intel­lec­tual prop­erty. For them, the sum­mer of 2012 means worse things than hot tem­per­a­tures: on June 30, C-11 became law with­out any amend­ments; two weeks later, the Indus­try Min­is­ter by-passed the Copy­right Com­mis­sion and reg­u­lated that mem­ory sticks are not to be sub­ject to a levy like CDs and tapes, and now, these five judg­ments by the top legal author­ity in the land.

One of the eagerly expected deci­sions con­cerned pho­to­copy­ing parts of text book mate­r­ial by a teacher. This case pit­ted the provin­cial min­is­ters of edu­ca­tion (Que­bec excepted) against Access Copy­right, rep­re­sent­ing authors and pub­lish­ers. In a split deci­sion (5–4), the Court referred the case back to the Copy­right Board for re-determination in light of the Court’s deci­sion. The Copy­right Board will decide whether the rul­ing changes its impres­sion that the deal­ing was unfair.

Not sur­pris­ingly, the edu­ca­tion com­mu­nity, notably the Copy­right Con­sor­tium of the Coun­cil of Min­is­ters of Edu­ca­tion, Canada (CME) and the Cana­dian Fed­er­a­tion of Stu­dents are happy. The Nova Sco­tia Edu­ca­tion Min­is­ter, Ramona Jen­nex, Chair of the Edu­ca­tion Min­is­ters Con­sor­tium, stated: “Coun­tries with copy­right laws per­mit­ting a teacher to copy short excerpts all have healthy edu­ca­tional pub­lish­ing indus­tries. Mak­ing copies of short excerpts is not a sub­sti­tute for pur­chas­ing copyright-protected edu­ca­tional resources.” Access Copy­right has reacted pru­dently to the Court’s deci­sion, not­ing that this par­tic­u­lar type of copy­ing rep­re­sents less than 7% of copies made in schools and col­leges. Exec­u­tive Direc­tor Mau­reen Cavan said, “The deci­sion absolutely does not mean a free-for-all on copyright-protected mate­ri­als used in the classroom”.

The Court also dealt with issues con­cern­ing music, notably on-line lis­ten­ing and the pur­chas­ing of music: should pre­view­ing music on-line prior to pur­chas­ing trig­ger a right? Should there be a new tar­iff in the case of down­load­ing music or for streaming?

In the case of down­load­ing and pre­view­ing, the Court sided with the giant dis­tri­b­u­tion com­pa­nies who had opposed SOCAN’s appli­ca­tion. Accord­ing to the Court, “There is no prac­ti­cal dif­fer­ence between buy­ing a durable copy of the work in a store, receiv­ing a copy in the mail, or down­load­ing an iden­ti­cal copy using the Inter­net.” In the case of stream­ing how­ever, the Supreme Court con­firmed that lis­ten­ing on line with­out down­load­ing does require the pay­ment of a right since this is a “com­mu­ni­ca­tion to the public”.

In another case, the Court rejected a request that video games which are down­loaded rather than bought on a phys­i­cal sup­port be the object of a spe­cific tar­iff. The Court also stated that musi­cians and pro­duc­ers are not enti­tled to com­pen­sa­tion when their record­ings are broad­cast on tele­vi­sion or in a film.

Accord­ing to Ian McKay, Pres­i­dent of the music col­lec­tive Re:Sound “Unfor­tu­nately, Canada’s copy­right law has today been found to put Cana­dian record­ing artists and record com­pa­nies at a dis­ad­van­tage in the inter­na­tional marketplace.”

Iron­i­cally, in Bei­jing on June 26, the 185 mem­ber coun­tries of the World Intel­lec­tual Prop­erty Orga­ni­za­tion (WIPO) con­cluded a treaty strength­en­ing the eco­nomic rights of per­form­ers in audio­vi­sual media dis­tri­b­u­tion. Canada is a mem­ber of WIPO but was con­spic­u­ously absent from the meet­ing. If and when the Cana­dian gov­ern­ment signs the new treaty, the Copy­right Act will have to be amended and this deci­sion revisited.

It is worth not­ing that in all deci­sions related to music, the Court stated that appro­pri­ate pay­ments had been made in other phases of the cre­ative process and that based on the prin­ci­ple of tech­no­log­i­cal neu­tral­ity, there was no rea­son to impose a new tariff.

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The fol­low­ing is an overview of each case:

1. Is a point‑to‑point trans­mis­sion from the web­site of an online music ser­vice to an indi­vid­ual cus­tomer a pri­vate com­mu­ni­ca­tion? Does stream­ing of files from the Inter­net trig­gered by indi­vid­ual users con­sti­tute com­mu­ni­ca­tion to the pub­lic of the musi­cal works by online music ser­vices which make the files avail­able for streaming?

Those two ques­tions were raised in the case of Rogers, Shaw, Bell and Telus ver­sus the Soci­ety of Com­posers, Authors and Music Pub­lish­ers of Canada (SOCAN). The Court has stated that no new pay­ment should be required when the piece of music is down­loaded but that artists must be paid in cases of stream­ing. Accord­ing to our infor­ma­tion, SOCAN may go back to the Court for fur­ther clarifications.

2. Can ele­men­tary and sec­ondary schools claim the ben­e­fit of “fair deal­ing” excep­tion for copies of works made at the teach­ers’ ini­tia­tive with instruc­tions to stu­dents that they read the material?

This case was deemed very impor­tant for Access Copy­right, opposed here by the gov­ern­ment of Alberta’s Edu­ca­tion Min­is­ter, who had the sup­port of all other provinces except Québec. The Court has asked the Copy­right Board to review in light of the present decision.

In the pre-C-11 ver­sion of the Copy­right Act, pho­to­copy­ing with­out com­pen­sa­tion was only allowed if done for research or pri­vate study. In its judg­ment, the Court relies on its 2004 deci­sion: since the teacher mak­ing pho­to­copies for his stu­dents is not doing it for com­mer­cial pur­poses, the activ­ity should be con­sid­ered fair deal­ing, par­tic­u­larly since “there was no evi­dence of a link between pho­to­copy­ing short excerpts and a decline in text­book sales. There were sev­eral fac­tors, in fact, other than pho­to­copy­ing, that were more likely to have con­tributed to any such decline.”

This deci­sion shows an impor­tant divi­sion within the Court with Jus­tices Deschamps, Fish, Roth­stein and Cromwell dis­sent­ing from the majority.

3. Is the trans­mis­sion of musi­cal works con­tained in a video game through an Inter­net down­load a com­mu­ni­ca­tion to the public?

This case pit­ted SOCAN against the Enter­tain­ment Soft­ware Asso­ci­a­tion of Canada. The deci­sion again shows the divi­sion within the Court, with the same four Jus­tices dis­sent­ing. Con­trary to the Copy­right Board, the Court con­sid­ers that apply­ing a dis­tinct tar­iff for the “com­mu­ni­ca­tion” of musi­cal works con­tained in a video game through an Inter­net down­load would be con­trary to the prin­ci­ple of tech­no­log­i­cal neu­tral­ity, “There is no prac­ti­cal dif­fer­ence between buy­ing a durable copy of the work in a store, receiv­ing a copy in the mail, or down­load­ing an iden­ti­cal copy using the Inter­net. ESA has already paid repro­duc­tion roy­al­ties to the copy­right own­ers for the video games.”

Accord­ingly, the Supreme Court asks the Copy­right Board to rescind its pre­vi­ous deci­sion to the effect that down­load­ing a per­ma­nent copy of a video game con­tain­ing music is tan­ta­mount to “com­mu­ni­cat­ing” the music and trig­gers the appli­ca­tion of Art. 3 (1)f of the Copy­right Act.

The four dis­sent­ing Jus­tices (LeBel, Fish, Roth­stein and Cromwell) pre­fer to nuance the con­cept of tech­no­log­i­cal neu­tral­ity, “The right of repro­duc­tion con­tin­ues to apply to copies made through down­loads notwith­stand­ing that they are dig­i­tal copies and the com­mu­ni­ca­tion right con­tin­ues to apply to dig­i­tal com­mu­ni­ca­tions notwith­stand­ing that they may dif­fer from tra­di­tional broad­cast­ing technologies.”

4. Does lis­ten­ing to music excerpts on com­mer­cial sites fall under the fair deal­ing excep­tion for research?

This case pit­ted music col­lec­tives against ser­vice providers like Bell, Apple and Rogers Com­mu­ni­ca­tions which allow poten­tial cus­tomers the abil­ity line to pre­view the music on-line before buy­ing it. The col­lec­tives were ini­tially turned down by the Copy­right Board for their appli­ca­tion request­ing a pay­ment for the use of short sam­ples of music on sites that sell music, the col­lec­tives appealed the deci­sion at the Fed­eral Court which upheld the Commission’s deci­sion that no com­pen­sa­tion should be paid for pre­views of 30 to 90 sec­onds. Refer­ring to its 2004 CCA deci­sion regard­ing fair deal­ing, the Court sided with the ser­vice providers that this was fair dealing.

5. Do pre‑existing record­ings incor­po­rated into sound­tracks of cin­e­mato­graphic work con­sti­tute a sound record­ing sub­ject to pay­ment of tar­iff?

This fifth cause pit­ted Re:Sound against the Motion Pic­ture The­atre Asso­ci­a­tions of Canada, Rogers Com­mu­ni­ca­tions Inc., Shaw Com­mu­ni­ca­tions Inc., Bell ExpressVu LLP, Cogeco Cable Inc., East­link, Que­becor Media, TELUS Com­mu­ni­ca­tions Com­pany, the Cana­dian Asso­ci­a­tion of Broad­cast­ers and Cana­dian Broad­cast­ing Corporation.

The Supreme Court stated that per­form­ers and music record­ing com­pa­nies are not enti­tled to a sep­a­rate pay­ment when their music is part of the sound­track of a film or a tele­vi­sion program.

Under s. 19 of the Act, Re:Sound “is enti­tled to col­lect equi­table remu­ner­a­tion on behalf of per­form­ers and mak­ers of sound record­ings when their record­ings are per­formed in pub­lic or com­mu­ni­cated to the pub­lic by telecommunication.”

Dur­ing the draft­ing of the revi­sion of the Copy­right Act in 1997, the def­i­n­i­tion of “sound record­ing” was amended at the Com­mit­tee stage so as to ensure that while a sound­track would not be a sound record­ing and there­fore would not attract equi­table remu­ner­a­tion when accom­pa­ny­ing a movie or tele­vi­sion pro­gram, the sound­track would be a sound record­ing and would attract equi­table remu­ner­a­tion when it was played sep­a­rate from the movie or program.”

*We have made revi­sions to this Bul­letin. Please use this ver­sion for reference.