Consumers can purchase video games by downloading them online. The games downloaded often  contain copyright protected musical works.  

SOCAN sought to obtain compensation, on behalf of music owners, for their right under the Copyright Act to “communicate” musical works “to the public.” SOCAN’s position is that when a game containing music is downloaded by consumers, this is a communication of the music to the public that requires payment.  

SOCAN applied to the Copyright Board for a tariff of remuneration to be paid by service providers offering music downloads over the Internet. The Copyright Board concluded that when service providers offer a video game containing music by download, a fee is required to be paid. This was upheld by the Federal Court of Appeal. These decisions were consistent with a number of previous decisions of the Board and the courts, including the Supreme Court’s 2004 decision in SOCAN v. CAIP.

Writing for the majority in a divided Supreme Court of Canada (the decision was 5-4), Justices Abella and Moldaver agreed with ESA that the exclusive right enjoyed by music owners is to “communicate” their works to the public, and that the word “communicate” in the context of the Copyright Act has historically connoted an act akin to a public performance or broadcast. In contrast, a download transmits a permanent copy of a work to a consumer akin to physical delivery of a physical product.  

The Court expressed the view that there was no practical difference between buying a durable copy of the work in a store or downloading an identical copy using the Internet. The majority was troubled by the fact that an added communication royalty would not have to be paid when games are sold through traditional channels. In the Court’s view, the principle of technological neutrality required an interpretation of the Copyright Act that avoids imposing additional layers of protections and fees based solely on the method of delivery of the work to users.  

Dissenting reasons were given by Justice Rothstein for four members of the Court, who would have upheld the Board’s decision that an additional fee is required to be paid for online delivery. In Justice Rothstein’s words: “[T]he Internet may well be described as a technological taxi; but taxis need not give free rides.” Justice Rothstein also noted that the Copyright Board is authorized to set appropriate royalty rates, including by taking into account any concerns as to overlapping rights and alleged “double-dipping” by rights-holders.  

The following is a link to the full decision: http://scc.lexum.org/en/2012/2012scc34/2012scc34.html