Stuart Freen is a JD candidate at Osgoode Hall Law School

Last week the Federal Court of Appeal upheld a 2007 Copyright Board decision concerning online music stores and those 30 second previews that are found on nearly every music download site. In doing so they endorsed a broad definition of the term “research” for the fair dealing exception, holding that it is indeed broad enough to capture the practice of music shoppers previewing which songs they want to buy. Perhaps just as notably, the FCA adopted a users-centric approach that signals good things to come for the fair dealing exception.

For some time now the Canadian music copyright collective SOCAN has been clamouring to get a new tariff put in place for those short, typically 10-30 second long preview tracks that shoppers can listen to when they are browsing for music online. From a user’s perspective this may seem a little strange – after all, people only listen to those previews to see if they like a song and want to buy the whole thing (or even just to verify if it’s the song they thought it was). There’s not necessarily any purchase being made, so why should the musicians collect any royalties? SOCAN has a bit of a different perspective: in their view, these previews are customer service features implemented by online music stores to draw in shoppers. They argue that music retailers are improving their websites’ usability and attracting customers using the previews, and authors deserve a slice of that increased revenue.

Unfortunately for SOCAN, the Copyright Board rejected the proposed tariff in an October 2007 decision.¹ The Board held that the practice of using preview clips fell under the umbrella of the fair dealing exception of the Copyright Act, since (in the Board’s opinion) users were merely researching which songs they want to buy. Section 29 of the Copyright Act provides that “[f]air dealing for the purpose of research or private study does not infringe copyright.” After a careful consideration of each of the six factors enumerated by the Supreme Court in CCH Canadian Ltd. v. Law Society of Upper Canada,² the Board arrived at the conclusion that the use of the preview clips was fair dealing. Interestingly, none of the parties before the Board had actually argued for the fair dealing exception; the Board applied it on their own accord.

Last week the FCA released its judgment on an application for judicial review of the Copyright Board’s decision. The Court dismissed the application and upheld the Board’s decision, finding that it was an appropriate application of the fair dealing exception. They considered the meaning of the term “research” at length before concluding that Parliament could not have intended it to apply only to hard, scientific research. Rather, it was intended to apply to a broad range of user activities including this particular online shopping practice.

Importantly, the Court rejected SOCAN’s arguments that music stores were receiving a windfall through the use of copyrighted clips. While Justice Létourneau agreed that retailers were using the clips to increase sales, he found that this alone did not entitle SOCAN to collect royalties. He noted:

“We must consider previews from the point of view of the person for whom they are intended: the consumer of the subject-matter of the copyright. Their purpose is to assist the consumer in seeking and finding the desired musical work.”

The decision represents a positive development for those of us who support an expanded role of user’s rights. As in CCH and the earlier Copyright Board decision, the FCA held that the fair dealing exception should be applied from the perspective of the user, not the service supplier/facilitator. So, while the music retailers may have been exploiting copyrighted works for their own gain, the preview system as a whole facilitated fair dealing activities at the user level and was therefore protected. This user-centric approach makes sense from an economic perspective, too: had the tariff been approved, retailers would theoretically have needed to raise prices to compensate and ultimately it would be the users who would pay the music previews.

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¹ Decision of the Board, Files: Public Performance of Musical Works, October 18, 2007, Copyright Board of Canada, at paras 101 to 116.

² 2004 SCC 13

Posted in Copyright, Fair Dealing, Music Industry, Music Industry