In a short decision, the Supreme Court of Canada affirmed the
Federal Court of Appeal's ruling that Internet Service
Providers ("ISPs") do not carry on "broadcasting
undertakings" subject to regulation by the Canadian
Radio-television and Telecommunications Commission
("CRTC") under the Broadcasting Act.
This case arose from a reference by the CRTC to the Federal
Court of Appeal following its 2009 determination to continue the
1999 New Media Exemption Order (the "Order"). During the
CRTC proceeding, a coalition representing the Canadian cultural
industry proposed a levy on ISPs in order to fund the creation of
new Canadian broadcasting content for the "new media"
platform (consisting of Internet and mobile media applications),
similar to existing levies that are paid by traditional
broadcasters in Canada.
In its 2009 ruling (Broadcasting Regulatory Policy CRTC 2009-
329), the Commission determined that a levy was unnecessary.
Nevertheless, it wished to resolve the question of whether ISPs are
subject to the Broadcasting Act, because if so, ISPs would
fall within the scope of the Order, which was intended to encompass
all broadcasting undertakings whose services are delivered and
accessed over the Internet. Rather than ruling on whether ISPs were
broadcasting undertakings, the CRTC referred the following question
to the Federal Court of Appeal: "Do retail Internet service
providers (ISPs) carry on, in whole or in part, "broadcasting
undertakings" subject to the Broadcasting Act when,
in their role as ISPs, they provide access through the Internet to
"broadcasting" requested by end-users?" In its
decision (Re Canadian Radio-television and Telecommunications
Commission, 2010 FCA 178), the Federal Court of Appeal said
"no," finding that ISPs are not carrying on a
"broadcasting undertaking" under the Broadcasting
Act where the ISP's role is strictly limited to providing
an end-user with access to the Internet and therefore has no
control over the content made available to the end-user. The
cultural groups were granted leave to appeal to the Supreme Court
In its brief decision released on February 9, 2012
(Reference re Broadcasting Act, 2012 SCC 4), the Supreme
Court of Canada unanimously affirmed the Federal Court of
Appeal's decision and dismissed the appeal. The Supreme Court
of Canada agreed with the Federal Court of Appeal's
interpretation that the term "broadcasting undertaking"
in the Broadcasting Act does not contemplate an entity
that has no role in contributing to the policy objectives stated in
section 3(1) of the Act. Those policy objectives focus on
content, such as the cultural enrichment of Canada, the promotion
of Canadian content, establishing a high standard for original
programming and ensuring that programming is diverse. The Court
noted that an ISP does not engage with those policy objectives when
it merely provides the mode of transmission for content.
The Court found that this interpretation of "broadcasting
undertaking" is consistent with its decision in Electric
Despatch Co. of Toronto v. Bell Telephone Co. of Canada
(1891), 20 SCR 83, in which the Court was tasked with determining
whether the term "transmit" implicated an entity who
merely provided the mode of transmission, in a case involving an
exclusivity contract relating to messenger orders. In Electric
Despatch, it was found that only the sender of a message could
be said to "transmit" the message. The Supreme Court of
Canada relied on Electric Despatch in SOCAN v.
CAIP, 2004 SCC 45, where it held that because ISPs merely act
as a conduit for information provided by others, ISPs themselves
could not be held to "communicate" that information to
Ultimately, considering that term in the context of the scheme
and purpose of the Broadcasting Act, the Supreme Court of
Canada's decision affirms that ISPs, when acting solely in
their capacity to provide access to the Internet, are not
"broadcasting undertakings" under the Broadcasting
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The amendments will increase uncertainty, and will result in costly investigations associated with trademark clearance searches as well as risk analysis relating to opposition proceedings and infringement actions.