The Supreme Court of Canada (SCC), in recent years, has
seemingly developed a newfound interest in matters of copyright
which, for decades prior to the digital revolution, had been
perceived as a relatively sleepy law to many. Over the past decade,
however, that has changed. The SCC released a number of key
decisions, some foundational in nature, that help us better
understand the functioning of copyright law, which has become
increasingly important in the digital age. The SCC recently released five decisions on a single day. A
previous
Blakes Bulletin on Intellectual Property discussed two
of the decisions; this bulletin addresses the other three. Two of
them – Entertainment Software Association v. Society
of Composers, Authors and Music Publishers of Canada and
Rogers Communications Inc. v. Society of
Composers, Authors and Music Publishers of Canada
– consider what qualifies as the communication of a work
to the public by telecommunication under the Copyright Act
(the Act). Such communication entitles the holder of copyright in
the work to a royalty payment approved by the Copyright Board of
Canada (the Board). The SCC held that downloading music is not a communication to
the public under the Act, as this transmission is simply a more
technologically advanced way of providing a copy of a musical work
to the public as compared with selling the copy in a physical
store. As a result, although royalties must still be paid to copy a
song, additional royalties are not required when this copy is
downloaded from the Internet. Streaming music, however, was deemed
not to be a private transaction between an online music provider
and a member of the public and is thus subject to royalty
payments. In the third decision, Re:Sound v. Motion Picture Theatre
Associations of Canada, the SCC held that the performers
and makers of sound recordings are not entitled to equitable
remuneration when their sound recordings are featured in movie or
television soundtracks. The Entertainment Software Association case considers
whether music that is embedded in a video game and downloaded over
the Internet constitutes a communication of that music to the
public within the meaning of paragraph 3(1)(f) of the Actand
consequently requires the payment of royalties to copyright
holders. The Society of Composers, Authors and Music Publishers of Canada
(SOCAN), the collective rights society that represents composers,
authors and music publishers in Canada, had applied to the Board
for a tariff to be imposed on musical works featured on video games
that are downloaded by a user. Although the music incorporated into
video games is already subject to royalties negotiated with
copyright holders before games are even published, the Board agreed
with SOCAN that an additional tariff should be imposed where an
online download takes place. The Board concluded that the act of
downloading, although a one-to-one transaction, is a
"communication to the public" within the meaning of
paragraph 3(1)(f) and thus requires a royalty payment. The
Board's decision was upheld by the Federal Court of Appeal (the
FCA). A five-to-four majority of the SCC set aside the FCA's
decision to uphold the tariff imposed on music embedded in video
games. The principle of technological neutrality, which maintains
that the Act should apply equally to traditional and more
technologically advanced media, was key to the SCC's
conclusion. Ultimately, the SCC held that certain games should not attract
additional royalty payments merely because they are downloaded over
the Internet as opposed to being purchased in a traditional store.
The SCC reasoned that this would result in the double compensation
of rights holders, and impose an additional cost on the use of
Internet-based technologies. The SCC noted that, since there is no
practical difference between downloading and purchasing a physical
copy of a game, "the Internet should be seen as a
technological taxi that delivers a durable copy of the same work to
the end user". The SCC further held that such an approach
achieves the proper balance between promoting the public interest
and the dissemination of works, on the one hand, and rewarding the
creators of these works, on the other. This reasoning would apply
not only to video game downloads but also to any files similarly
transmitted over the Internet. The SCC also examined the phrase "to communicate
the work to the public by telecommunication"
(emphasis added) in paragraph 3(1)(f). The SCC noted that, although
the term "communication" is not defined in the Act, it is
traditionally tied to the performance aspect of a work. The term
"telecommunication", on the other hand, relates to the
reproduction of a work. After reviewing the legislative history of
paragraph 3(1)(f), the majority of the SCC concluded that the
communication and performance aspect is the focus of paragraph
3(1)(f) and that it should not be read to capture acts of
reproduction. The SCC then reasoned that the act of downloading
leads to the eventual reproduction of works rather than the
performance of these works. As such, downloads should not be
qualified as "communications to the public" pursuant to
paragraph 3(1)(f), and the music or other copyrighted material they
contain should therefore not be subject to royalty payments. Four dissenting judges disagreed with this interpretation of
paragraph 3(1)(f) and held that copyright holders should be
entitled to compensation for both the communication and the
reproduction of downloaded works. Although they found that
technological neutrality is desirable, they were unwilling to
confine the communication right to a performance right. As such,
although downloads lead to reproduction rather than performance of
works, royalty payments are still owed. Adopting a similar analogy
as the one used by the majority, the dissenting judges remarked
that "In many respects, the Internet may well be described as
a technological taxi; but taxis need not give free rides." Rogers Communications Inc. v. Society of Composers, Authors
and Music Publishers of Canada also deals with the
interpretation of paragraph 3(1)(f) of the Act, but in the context
of online music service providers, such as Apple's iTunes. More
specifically, the case considers whether a song downloaded or
streamed by an individual through an online music service qualifies
as a communication of that song to the public by telecommunication
under the Act and requires the payment of royalties. The Board certified a tariff covering music accessed using the
Internet. Rogers and others sought review of this decision by the
FCA and argued that music downloads are private
"point-to-point" transactions between the individual and
the online music service as opposed to public
communications. In response, SOCAN argued that repeated
transmissions of the same musical works could transform these
discrete transactions into communications to the public. Intention of Communicator The FCA reasoned that as long as a communication is intended to
be received by members of the public, even in the context of
private transactions, there is a communication to the public within
the meaning of the Act. To illustrate its point, the FCA drew an
analogy: although a traditional vendor may sell a product to
someone through the course of an individual sale, this vendor is
still understood as selling goods to the public at large as they
intend to do so. Since online music providers intend to serve the
public, music downloads are similarly considered communications to
the public. Reception of Communication by Member of the
Public Although it found in favour of SOCAN, the FCA disagreed with
SOCAN's view that a music download is a communication to the
public because it is repeatedly transmitted. The FCA held that the
number of persons who receive the communication is irrelevant in
this determination as long as there is at least one recipient. The
FCA again drew on the sales analogy to illustrate its point: a
traditional vendor still "sells to the public" even if
only one individual actually purchases his goods. As such, it does
not matter how many times a music file is downloaded –
each download, starting with the first, is a communication to the
public. In its unanimous decision, the SCC began by distinguishing
between music downloads and music streams. In the first case, a
permanent copy is provided to the user while, in the second, only a
temporary copy is made available. With respect to downloads, the SCC found itself bound by its
decision in the Entertainment Software Association
casediscussed above. Musical works are not communicated to the
public within the meaning of paragraph 3(1)(f) when they are
downloaded, since the act of downloading is merely a more
technologically advanced way of providing copies of works to end
users. Nonetheless, the SCC found that streaming a musical work,
although a "point-to-point" communication, qualifies as a
communication to the public pursuant to the Act. The SCC held that
the true character of the communication activity must be examined
when determining if a "point-to-point" communication
engages the exclusive right to communicate to the public. In the
case of an online music provider offering streams, the SCC
concluded that the communication activity at issue results in
copyrighted works being indiscriminately made available to anyone
with Internet access. As such, individuals who request streamed
music are not members of a small group or segment of the
population, but constitute instead "the public". The importance of the performance aspect rather than the
reproduction aspect of paragraph 3(1)(f) of the Act is also
implicit in the SCC's decision. Indeed, in Entertainment
Software Association, the SCC had noted that "Unlike a
download, the experience of a stream is much more akin to a
broadcast or performance". As such, streams are appropriately
qualified as communications to the public pursuant to paragraph
3(1)(f). The SCC noted that excluding music streams from being qualified
as communications to the public merely because they are initiated
at an individual's request would have the perverse effect of
excluding all interactive communications from such qualification.
Although communications to the public were historically linked to
broadcasting or "push" models, a technologically neutral
approach to copyright law requires that "pull" models
also qualify as communications to the public when the public at
large is requesting works. Re:Sound v. Motion Picture Theatre Associations of
Canada Re:Sound v. Motion Picture Theatre Associations deals
with a different issue: whether a sound recording which is used as
part of a movie soundtrack or television program is subject to
equitable remuneration. This issue arose when Re:Sound, a collective rights society,
applied for two tariffs: Tariff 7, which sets royalties for the use
of sound recordings used by movie theatres, and Tariff 9, which
sets royalties for sound recordings used in television programs.
These tariffs were based on section 19 of the Act, which states
that, "[w]here a sound recording has been published, the
performer and maker are entitled [...] to be paid equitable
remuneration for its performance in public or its communication to
the public by telecommunication". The Board refused to certify
the tariffs based on the definition of "sound recording"
under section 2 the Act, which excludes "any
soundtrack of a cinematographic work where it accompanies
the cinematographic work" (emphasis added). Re:Sound had argued that the carve-out in the definition of
"sound recording" excludes the soundtrack as a
whole from the definition of sound recording, but not its
individual components. As such, makers and performers of
separate sound recordings included in a soundtrack should be able
to claim equitable remuneration. The Board did not agree with this
argument and concluded that "neither the soundtrack nor any of
its constituent parts are a 'sound recording' when they are
communicated or performed with [a] program or movie". On appeal, the FCA found this argument to be ill-founded, as the
Act provides that unauthorized reproductions of published sound
recordings already attract copyright protection. For example,
pursuant to subsection 17(1) of the Act, a performer must authorize
the embodiment of a performance in a cinematic work. Any
unauthorized embodiment is thus in contravention of the Act.
Furthermore, a sound recording which is extracted from a soundtrack
contained in a cinematographic work also attracts the protection
offered to performers and makers of stand-alone sound recordings
under the Act. The SCC agreed with the conclusion of both the Board and the FCA
that soundtracks include pre-existing sound recordings and
therefore do not require equitable remuneration under section 19.
According to the SCC, this conclusion is supported by general rules
of statutory interpretation, the scheme of the Act and the
Parliament of Canada's intention. For instance, the SCC noted
that, had Parliament intended on excluding individual sound
recordings from the meaning of "soundtrack", more
explicit wording to this effect would have been used. Indeed,
Parliament could have excluded "the aggregate of sounds in a
soundtrack" from equitable remuneration but instead chose to
exclude the entire soundtrack, including its individual components.
The SCC further held that its conclusion also meets Canada's
international legal obligations under the Rome Convention,
which similarly excludes soundtracks from the definition of sound
recording (or "phonogram"). The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
Entertainment Software Association v. SOCAN
Underlying Decisions
Supreme Court of Canada
Rogers Communications v. SOCAN
Underlying Decisions
The FCA held that music downloads are communications to the public
based on two factors:
Supreme Court of Canada
Underlying Decisions
Re:Sound further argued that a decision not to allow equitable
remuneration would have unfair consequences for the rights of
performers and makers of sound recordings. It explained that a
sound recording incorporated in a soundtrack could potentially be
disseminated over the Internet or extracted from a DVD and
republished without any recourse available to the rights
holder.Supreme Court of Canada