Rulings scrap some fees, clarify copyright rules

The Supreme Court of Canada handed down its highly anticipated decisions in five copyright cases today, which in effect scrapped some of the existing copyright fees and clarified the copyright rules for the Internet. It’s a rare day that the court releases so many decisions in one area of law on the same day.

Barry Sookman, a partner at McCarthy Tétrault LLP and co-chairman of the firm’s technology law group, says, “The court takes a very pragmatic approach to looking at copyright and the Internet.”

The Copyright Board had approved taxes for downloading but they were appealed by large Canadian telecommunications companies like Rogers Communications, Bell Canada, Telus Communications, and Shaw Cablesystems.

In 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, the SCC was tasked with determining what qualifies as a communication to the public.

In Rogers, the court found that on-demand services have to pay for uses of music, says Sookman. Rogers argued that it could have on-demand services like pay-per-view for free, which was not considered communicating to the public.

“The court rejected [Rogers’ argument], taking a very pragmatic approach, saying, ‘Look, in effect, copies of music are being made available to the public and so it doesn’t make a difference whether it’s one at a time or over time, significant works are made available to the public and so that’s a communication which is to the public,” he says.

On behalf of the majority in Rogers, Justice Marshall Rothstein wrote: “In these circumstances, the transmission of any file containing a musical work, starting with the first, from the online service’s website to the customer’s computer, at the customer’s request, constitutes ‘communicat(ing)’ the work to the public by telecommunication.”

In Entertainment Software Association, the court found that a download was not a communication to the public.

“[The court] rejects an approach that would treat the Internet in a completely different way than a traditional distribution,” says Sookman.

SOCAN argued that buying a video game in a store is not a communication to the public, but when sold over the Internet it is considered as such.

“The court rejected this artificial distinction based on the principle of technological neutrality,” he says.

In Society of Composers, Authors and Music Publishers of Canada v. Bell Canada, the court determined that music previews are considered a fair dealing. As such, previews on iTunes, for instance, do not merit the payment of royalties.

“Because of their short duration and degraded quality, it can hardly be said that previews are in competition with downloads of the work itself. And since the effect of previews is to increase the sale and therefore the dissemination of copyrighted musical works thereby generating remuneration to their creators, it cannot be said that they have a negative impact on the work,” wrote Justice Rosalie Abella in the decision.

With its ruling in Province of Alberta v. Canadian Copyright Licensing Agency, which involved a dispute over copyright rules for photocopying textbooks at schools, Sookman says the top court clarified the framework for fair dealing.

“Under fair dealing, there has to be two steps. The first step looks to see if it’s an allowable purpose and the second step looks to see if the dealing is a fair one,” he says. “The court said you could look at the purpose of the user rather than the purpose of the copier. . . . That is a radical departure from previous cases.”

Now everything comes into the mix when determining if a particular deal is fair or not, he adds. The SCC sent this case back to the Copyright Board for further review.

Sookman says these rulings have a wide-ranging impact.

“This goes beyond just music because it applies to everything that contains music. . . . This is very significant because it means that when the Internet is now used as a delivery mechanism — whether it’s for e-books, movies, video games, or music — SOCAN doesn’t get paid,” he says.

The songwriters still get paid under the reproduction rights, but they won’t get paid twice as SOCAN was seeking to achieve, he says.

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