On March 24, the Supreme Court of Canada granted leave to appeal with respect to three decisions of the Federal Court of Appeal. These three cases will have a profound impact on the regulation of the internet in Canada and the development of a digital economy where goods and services are increasingly accessed online.

The first case, the ISP Reference, deals with the jurisdiction of the Canadian Radio-television and Telecommunication Commissions (CRTC) to regulate the activities of internet services providers (ISPs) under the Broadcasting Act. The issue arose in the context of a proposal to the CRTC by cultural groups to collect fees from ISPs to help finance the development of Canadian content online.

The second and third cases, Bell and ESA deal with the application of copyright law to online transactions, particularly the online sales of music and video games.

The ISP Reference: Canadian Radio-television and Telecommunications Commission (Re), 2010 FCA 178

This case arose from a CRTC reference to the Federal Court of Appeal. The Commission asked the Federal Court of Appeal to address the following question:

Do retail Internet service providers (ISPs) carry on, in whole or in part, "broadcasting undertakings" subject to the Broadcasting Act, [S.C. 1991, c. 11 (the Broadcasting Act)] when, in their role as ISPs, they provide access through the Internet to "broadcasting" requested by end-users?

The reference question emerged from a review of the CRTC's New Media Exemption Order, first issued in 1999, which exempted "new media broadcasting undertakings" from regulation under the Broadcasting Act. New media undertakings are those that are accessed, at least in part, over the internet. In 2008, the Commission initiated a review of the New Media Exemption Order. It issued a public consultation to determine whether the Exemption Order should be extended.

During the CRTC proceedings, ACTRA, CMPA, the Directors Guild and the Writers Guild ("the cultural groups") argued that ISPs should be subject to a levy imposed by the Commission. The groups reasoned that because members of the public could access broadcast content over the internet, ISPs were "broadcasting undertakings" and thus the proper subject matter of a fee that would fund Canadian new media content. The Commission rejected the proposal as a matter of policy, but thought the matter raised an important preliminary issue: Are ISPs "broadcasting undertakings" under the Broadcasting Act?

On June 4, 2009 the Commission released Broadcasting Regulatory Policy CRTC 2009-329. Rather than rule on whether ISPs were broadcasting undertakings, the CRTC referred the issue to the Federal Court of Appeal for determination.

The Federal Court of Appeal released its decision on July 7, 2010. The court held that ISPs, in the course of providing Internet connectivity, were not "broadcasting" and thus not broadcasting undertakings. As such, the court ruled that ISPs were not subject to the Broadcasting Act.

The cultural groups applied for leave to appeal to the Supreme Court and their application was granted March 24, 2011.

Bell Canada v. Society of Composers, Authors and Music Publishers of Canada, 2010 FCA 220 (Bell)

This Bell and Entertainment Software Association decisions, arise from the Copyright Board's (the Board) decision in SOCAN Tariff 22.A (use of music over the internet), dated October 18, 2007. Both Federal Court of Appeal judgments grapple with the same question: whether private point-to-point communications of copyrighted works (such as songs) are communications "to the public" of those works.

Communication to the Public by Telecommunication

For more than a decade, Tariff 22 has been the source of troublesome copyright law issues. Indeed, the initial Tariff 22 decision considered in SOCAN v. CAIP was delivered by the Copyright Board more than 13 years ago on October 27, 1997.

The ESA and Bell decisions, along with others, have created competing tests surrounding the meaning of "to the public" in the communication to the public provisions of the Copyright Act.

In CCH Canadian v. LSUC, the Supreme Court considered the issue in the context of the Great Library's fax service whereby it transmits by fax any work in its collection to Law Society member who asks. CCH suggests that frequency is paramount in considering whether a communication is to the public. The Supreme Court held that:

The fax transmission of a single copy to a single individual is not a communication to the public. This said, a series of repeated fax transmissions of the same work to numerous different recipients might constitute communication to the public in infringement of copyright.

Conversely, in CWTA v. SOCAN — a decision dealing with the transmission of ring-tones from telecom carriers to subscribers — the Federal Court of Appeal held that whether a set of serial private communications were to the public was based on whether the communication is made available "to a sufficiently large and diverse group of people".

Standard of Review

The recent Federal Court of Appeal decisions in Bell, ESA and Alberta (Education) v. Access Copyright, are sharp departures from past rulings on the standard of review applicable to Board decisions. Historically, Board rulings on pure questions of law regarding the Copyright Act were reviewed for correctness. Bell, with its two companion cases on the issue, requires deference for all types of inquiry. This, despite the fact that the Copyright Act is a law of general application, and that the Board's exclusive jurisdiction is limited to tariff setting.

The Facts and Issues in Bell

Tariff 22 concerns online music services. The issue in Bell is whether online services, in delivering musical works to their customers individually over the Internet, are communicating those works to the public.

The Court's Decision

Standard of Review

The Federal Court of Appeal's ruling on this issue is terse. The court felt that, given the Supreme Court's decision in Dunsmuir v. New Brunswick, all past jurisprudence on the issue was no longer valid. Purporting to apply Dunsmuir, the court held that the Board is entitled to deference because: 1) the Board is a specialized tribunal, and 2) the Copyright Act is its home statute. The Federal Court of Appeal went on to say that the Board is entitled to deference regardless of whether the issue is a question of fact, law, or mixed fact and law. Unsurprisingly, the standard of review in Bell is reasonableness.

Further, the Federal Court of Appeal — without considering the nature of question — determined that the issue before it was one of mixed fact and law despite the fact that Bell creates a new legal test to determine whether a communication is to the public.

Communication to the Public

The Federal Court of Appeal reviewed the long line of cases considering at the notion of "public" in the Copyright Act. After considering the jurisprudence, it ruled out the idea that for a communication to be to the public, recipients must receive the communication at the same time.

The court moved on to consider the line that separates a private point-to-point communication from a communication to the public. In doing so, the Federal Court of Appeal essentially considered the issue anew. The court reasoned that CCH did not resolve the issue. It found that "It is therefore an error to treat as settled law the proposition that a series of transmissions of a single work to multiple recipients amounts, in and of itself, to a communication to the public".

Something more than multiple recipients is required. The Federal Court of Appeal decided that the additional factor is "intent": a communication is to the public if the sender intended it to be to the public, and it is received by one or more members of the public. It analogized a communication to the public with the concept of selling to the public. The issue is not how many widgets are sold, but rather whether the widget is available to a member of the public if they choose to buy it.

The Federal Court of Appeal, in holding that intent is paramount, did not consider the Supreme Court's decision in CCH to be an obstacle. Rather, it reasoned that CCH stands for the principle that "multiple recipients could be evidence of an intention to communicate to the public".

Entertainment Software Association and the Entertainment Software Association of Canada v. CMRRA/SODRAC Inc., 2010 FCA 221 (ESA)

The Facts and Issues in ESA

The broad issue in ESA was whether a musical work is communicated to the public when a video game containing the musical work is communicated via sequential, point-to-point transmissions over the Internet. Since the interpretation of communication to the public was disposed of in Bell, the Federal Court of Appeal only considered the issues unique to the ESA case. Like Bell, the standard of review is reasonableness for all of three types of questions.

Two major issues are left unresolved by Bell: 1) whether a musical work is also communicated when a video game containing that work is communicated, and 2) whether agreements between ESA members and rights holders insulated ESA members from a SOCAN tariff.

The Federal Court of Appeal's Decision

The Federal Court of Appeal only considered whether the Board's conclusions were reasonable. The ESA had argued that communicating a video game is not a communication of a musical work since it only forms a very small part of a game. The court found that a de minimus rule was inappropriate given the scheme of the Copyright Act. Section 19(2) of that act gives the performers and makers of sound recordings an equitable right of remuneration for the communication to the public of sound recordings. Without a certified tariff, there is no opportunity for remuneration. The Federal Court of Appeal reasoned that a de minimus rule would be inconsistent with the right of remuneration in section 19(2). As such, the Board's decision was held to be reasonable.