Canada: For Your Attention January 2000: Copyright Board Breaks New Ground On Internet I

A long awaited decision by the Copyright Board of Canada on the scope of copyright protection for musical works communicated over the Internet was released on October 27, 1999. The decision concerns a statement of proposed royalties (Tariff 22) filed by Canada’s performing rights society, SOCAN, for the use of its musical works as part of Internet transmissions. In the first phase of ongoing proceedings, the Board was required to determine if section 3(1)(f) of the Copyright Act, which gives copyright owners the right to communicate their works to the public by telecommunication, was applicable in the particular context of the Internet.

After an eleven day oral hearing and the filing of written submissions by the parties, the Board concluded that Internet transmissions intended to be received by members of the public are communications by telecommunication to the public within the meaning of the Act. However, in order to occur in Canada, a communication must originate from a server located in Canada on which content has been posted. The Board also held that a work is communicated not when it is made available (e.g., by storing it on a host server where it can be accessed by members of the public), but when it is transmitted (i.e., each time a member of the public uses a browser to access the work from the source computer). When a work is transmitted in this fashion, it is the person who posted the work who communicates it. However, by making a work available to the public on a server, a person authorizes its communication and thus attracts liability, whether or not a communication occurs.

The Board went on to conclude that, generally, by virtue of section 2.4(1)(b) of the Act, entities acting as Internet intermediaries such as ISPs do not communicate works. However, such entities will not be entitled to claim the benefit of section 2.4(1)(b) if, as a result of business relationships or other factors, they do not limit themselves to acting as mere intermediaries (e.g., by posting content, associating themselves with others to offer content, moderating newsgroups, etc.).

The Board’s findings fell short of the result sought by SOCAN, which had taken the position that the only practical way of administering its performing rights in musical works used on the Internet was to license and collect all royalties from ISPs, rather than the multitude of individual websites on which musical works might be found. However, the decision confirmed that a statutory basis does exist for Tariff 22 and that the Board has jurisdiction to proceed to the next phase of the proceedings in which it will address issues relating to the structure of the tariff and the quantum of royalties to which SOCAN will be entitled. That phase of the Board’s proceedings may very well be delayed, however, in light of Federal Court applications filed by SOCAN and Time Warner Inc. seeking judicial review of the Board’s decision.

Gilles Daigle is an Associate in the Ottawa Gowlings office. He can be reached by e-mail at daigleg@gowlings.com.

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