The Supreme Court of Canada released five landmark copyright decisions on July 12, 2012. These five decisions address the application of the “fair dealing” test, as well as the legal interpretation to be given to several terms in the Copyright Act. The Court’s decisions represent its first review of any copyright issues since its Robertson v. Thomson Corp. decision was issued in 2006.

The recent five Supreme Court decisions can be summarized as follows.

Online music previews and students’ copies of short excerpts don’t infringe copyright: SOCAN v. Bell Canada and Alberta (Education) v. Access Copyright

SOCAN v. Bell Canada

In SOCAN v. Bell Canada, the Supreme Court upheld the decisions of the Copyright Board and the Federal Court of Appeal that the short song “previews” that online music services such as iTunes offer to consumers do not infringe copyright. This is because they are “fair dealing” for the purpose of “research” under the Copyright Act.

The Court confirmed the two-step analysis for fair dealing set out in its CCH v. Law Society of Upper Canada decision in 2004. This decision established that users have a right to deal fairly with copyright materials where (1) the dealing is for one of the purposes listed in the Copyright Act, including “research” or “private study” and (2) the dealing is “fair,” according to a court’s examination of six factors. The Court also affirmed that the term “research” must be given a large and liberal interpretation.

The real breakthrough in this case is that the Supreme Court explicitly found for the first time that the purpose of “research” should be analyzed from the perspective of the ultimate user instead of from the perspective of the commercial service that was facilitating the use. In this case, that meant that the Court looked at whether the consumer previewing music online was doing so as “research,” instead of whether the online music service was providing the previews for the purpose of “research.”

The Supreme Court then found that consumers’ previewing music online was “fair,” under the six-factor analysis at the second step of the CCH fair dealing test. It noted that, contrary to SOCAN’s arguments, research with an underlying commercial purpose is not de facto unfair. The Court noted that “reasonable safeguards” were in place that helped ensure that these previews were used for research. For example, previews last only 30 to 90 seconds, they are of low quality, and they are normally deleted from the user’s computer as soon as they are heard.

The Court dismissed SOCAN’s appeal. Jay Kerr-Wilson and Ariel Thomas, of Fasken Martineau’s Ottawa office, represented the successful Respondents Bell Canada, Rogers Communications Inc., Rogers Wireless Partnership, Shaw Cablesystems G.P., and Telus Communications Inc.

Alberta (Education) v. Access Copyright

Fair dealing under the Copyright Act is also addressed in Alberta (Education) v. Access Copyright.

This decision relates to a tariff which was filed with the Copyright Board with respect to the copying, in schools, of books, newspapers and magazines in Access Copyright’s repertoire. In assessing the number of copies for which schools would be required to pay Access Copyright, the Board concluded that copies made for students at a teacher’s initiative did not constitute fair dealing and were therefore subject to payment. This decision was upheld by the Federal Court of Appeal.

Before the Supreme Court, there was no dispute that these copies were made for the purpose of students’ “private study.” As such, the first step of the CCH fair dealing analysis was not at issue. However, at the second stage of the fair dealing analysis, Access Copyright argued that the purpose which should be considered is that of the teacher. Moreover, a teacher’s real purpose in making these copies is “public instruction,” rather than the fair dealing purpose of “private study.”

The Supreme Court held that, while the user’s (the student’s) purpose is the sole concern at the first step of the fair dealing analysis, the copier’s purpose may be relevant at the second stage of the analysis. Although the courts should be wary of a “copier” hiding behind the shield of the user’s allowable purpose in order to engage in a separate, unfair purpose, in this case, the teachers had no ulterior or commercial motive when providing copies of “short excerpts” of published works to their students. The Board’s decision was therefore found to be unreasonable due to a misapplication of the CCH fair dealing analysis, and the matter was remitted back to the Board for reconsideration in light of the Court’s reasons.

Aidan O’Neill and Ariel Thomas, of Fasken Martineau’s Ottawa office, represented the successful Appellants, which were the Ministries of Education of Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, the Northwest Territories, Nova Scotia, Nunavut, Ontario, Prince Edward Island, Saskatchewan, and Yukon, as well as all of the school boards in Ontario.

Fine points in the Copyright Act’s wording: Re:Sound v. MPTAC

In Re:Sound v. MPTAC, the definition of “sound recording” was the principal issue considered by the Supreme Court. Re:Sound had filed several tariff proposals with the Board claiming royalties for the use of pre-existing sound recordings in television broadcasts, as well as embodied in films shown at theatres and similar establishments. A number of parties objected to these tariff proposals on the grounds that the term “sound recording,” as defined in section 2 of the Copyright Act, excludes soundtracks of cinematographic works.

In its decision, the Supreme Court upheld the decisions of the Copyright Board and the Federal Court of Appeal, and confirmed that “sound recording” excludes soundtracks of cinematographic works. In reaching this decision, the Court applied the basic principles of statutory interpretation which clearly indicated that, as defined in the Copyright Act, Re:Sound’s tariff proposals did not have any legal foundation.

The Supreme Court dismissed Re:Sound’s appeal. Jay Kerr-Wilson, Ariel Thomas and Marisa Victor, of Fasken Martineau’s Ottawa office, represented the successful Respondents Bell ExpressVu LLP, Cogeco Cable Inc., Eastlink, Quebecor Media, Rogers Communications Inc., Shaw Communications Inc., and Telus Communications Company. Marek Nitoslawski, of Fasken Martineau’s Montreal office, represented the successful Respondent the Canadian Broadcasting Corporation. The Supreme Court accepted the Respondents’ arguments that Re:Sound is not entitled to receive payment for the broadcasting and performance of the sound recordings that are part of movie and television soundtracks.

 

Downloads don’t infringe the right to communicate to the public, but online streams do: Entertainment Software Association v. SOCAN and Rogers Communications v. SOCAN

Entertainment Software Association v. SOCAN

In Entertainment Software Association v. SOCAN, the Supreme Court found that the phrase to “communicate to the public” in section 3(1)(f) of the Copyright Act must be interpreted so that it is consistent with the principle of technological neutrality. In this case, the issue was whether the music embedded in video games which are downloaded or streamed are “communicated to the public” and are, as a result, compensable to SOCAN.

The Supreme Court found that downloading is the online equivalent of purchasing a physical copy of a game. By contrast, the communication right in section 3(1)(f) is concerned with performance-based activities. Therefore, downloads are not compensable to SOCAN.

However, the Court did uphold SOCAN’s proposed tariff in respect of musical “streams.” Because musical works in online catalogues are indiscriminately available to anyone with Internet access, the Court found them to constitute a communication to the public pursuant to section 3(1)(f).

Rogers Communications v. SOCAN

This case was merged with and closely paralleled Entertainment Software Association v. SOCAN. The question before the Court was almost identical to that in the Entertainment Software case: are musical works which are downloaded or streamed subject to royalties further to section 3(1)(f) of the Copyright Act?

Consistent with its Entertainment Software decision, the Supreme Court found that a download of a musical work was not subject to a tariff pursuant to section 3(1)(f). However, when considering section 3(1)(f) in the context of streaming, the Court interpreted “to the public” as referring to the end result of the communication rather than to the individual transactions. As such, a stream of a musical work via the Internet is subject to a SOCAN tariff as it is analogous to a radio transmission. According to this analysis, it is not a private transmission which would be copyright-free.

In its decision, the Supreme Court also engaged in a lengthy discussion with respect to the question of the appropriate standard of review. The Court held that the standard of review to apply was that of correctness as the question being asked was a legal question of statutory interpretation, in which the Board had no superior expertise.

Jay Kerr-Wilson, Ariel Thomas and Julia Kennedy, of Fasken Martineau’s Ottawa office, represented the successful Appellants Rogers Communications Inc., Rogers Wireless Partnership, and Shaw Cablesystems G.P. in Rogers Communications v. SOCAN. The Supreme Court accepted the Appellants’ arguments that the applicable standard of review to the Copyright Board’s interpretations of the Copyright Act is that of correctness, and allowed ESA’s appeal in its decision that downloads of copyright works are not “communications” under the Copyright Act.

Conclusion

These five Supreme Court decisions address three important points. First, fair dealing is not an exception to copyright owners’ rights; rather, fair dealing is a right that must be balanced against copyright owners’ rights. Second, as the media through which we access copyright materials develop, the Copyright Act must be interpreted in a manner consistent with the principle of technological neutrality. Finally, the Board is subject to judicial review on a standard of correctness in relation to any of its decisions which require it to interpret provisions of the Copyright Act.