SOCAN v. Bell: A Victory for Fair Dealing, Consumers?

Sometimes called “the Apple iTunes” case, SOCAN v Bell, 2012 SCC 36 was one of the five copyright rulings released by the Supreme Court of Canada last week. The case concluded that short preview clips streamed by online music retailers qualify as fair dealing for the purpose of research under s. 29 of the Copyright Act.

 

Background

Tariff 22, which was introduced in 1995 to accommodate music transmitted over the internet, was the subject to two other Supreme Court cases. The first, SOCAN v Canadian Assn. of Internet Providers, 2004 SCC 45, concerned intermediary liability. The other is one of the five cases the Court heard last December, Rogers Communications Inc et al v SOCAN, 2012 SCC 34, regarding whether the transmission of a single download to individual members of the public constitutes communication to the public under s. 3(1)(f) of the Act. The issue with Tariff 22 on the SOCAN v. Bell case is in regards to the brief previews offered by online music retailers such as iTunes.

 

Judicial History

In 2007, the Board decided that SOCAN was not entitled to royalties on short song clips because these uses constituted fair dealing. The Board concluded that previewsoffer an excerpt of the work that is long enough for the user to do his research, but short enough and of a sufficiently degraded quality that it cannot replace the complete work” [Re Public Performance of Musical Works (2007), 61 CPR (4th) 353]. The Board also construed the term “research” broadly:

“The Supreme Court of Canada has made it clear that ’research is not limited to non-commercial or private contexts.’ Planning the purchase of a download or CD involves searching, investigation: identifying sites that offer those products, selecting one, finding out whether the track is available, ensuring that it is the right version or cover and so on. Listening to previews assists in this investigation.”

(For more on the Board’s decision, see Music Previews: Should Use of a Marketing Tool be Considered Fair Dealing for the Purpose of Research?)

The Federal Court of Appeal upheld this decision, also finding that the previews were within the meaning of the word “research” set out in s. 29 of the Act; which permits fair dealing for the purpose of research or private study. The Court found that the language of the Act did not invite a narrow interpretation, noting that parliament “chose not to add restrictive qualifiers to the word ‘research’” [SOCAN v Bell, 2010 FCA 123]. Justice Létourneau, who delivered the judgment, further opined that:

It would not be unreasonable to give the word “research” its primary and ordinary meaning. The consumer is searching for an object of copyright that he or she desires and is attempting to locate and wishes to ensure its authenticity and quality before obtaining it.

He also addressed SOCAN’s contention that the primary purpose of the previews is of a commercial nature. SOCAN argued that the previews were intended to increase sales and profits. However, “this does not exclude other equally important purposes.” Justice Létourneau stressed that “[w]e must consider previews from the point of the view of the person for whom they are intended”.

 

Supreme Court Appeal

The case was then appealed to the Supreme Court, which held that the use of song previews constituted fair dealing for the purpose of research. Justice Abella, who delivered the unanimous judgment, followed CCH Canadian Ltd. v Law Society of Upper Canada, 2004 SCC 13 by allowing the term “research” a large and liberal interpretation:

“Limiting research to creative purposes would also run counter to the ordinary meaning of ’research’, which can include many activities that do not demand the establishment of new facts or conclusions. It can be piecemeal, informal, exploratory, or confirmatory. It can in fact be undertaken for no purpose except personal interest. It is true that research can be for the purpose of reaching new conclusions, but this should be seen as only one, not the primary component of the definitional framework.”

(See The Fivefecta: Canada’s Supreme Court Releases 5 Significant Copyright Decisions for a summary on the Supreme Court appeal.)

The Court also stressed that the analysis of whether an activity was done for research ought to be conducted from the end user’s perspective. The same consideration was seen in the sister judgment Province of Alberta v Access Copyright, 2012 SCC 37 where the Court said that it was the student, rather the teacher actually making the photocopies, who is engaging in private study.

The topic of research is highly relevant this week, during the 24th session of the Standing Committee of Copyright and Related Rights. One of the three topics taking the stage during the week and a half of meetings is copyright limitations and exceptions for educational and research institutions. Several draft provisions and definitions have been submitted, most notably from the African Group who highlighted “the need to maintain a balance between the rights of the authors and the larger public interest, particularly in education, research, teaching, and access to information” in their preamble (See Draft Compilation on Limitations and Exceptions for Educational and Research Institutions). The definition of “research” has yet to appear in any proposals but the Canadian cases will no doubt lend support to member states pushing for a broader interpretation. Delegates of both South Africa and Nigeria have referred to the recent Canadian fair dealing decisions in a positive manner at Tuesday’s SCCR meeting. In contrast, Canada has remained quiet thus far.

We had been waiting for a solid approach from the Supreme Court on how to interpret fair dealing since Michelin v C.A.W. Canada, [1997] 2 FC 306 and more recently, Canwest v Horizon, 2008 BCSC 1609, which employed a restrictive interpretation that some may consider contrary to the CCH decision. In both cases, the courts rejected the contention that parody does not violate copyright based on s. 29.1 of the Act, which allows fair dealing for the purpose of criticism or review. Although the point may very well be moot with the passing of Bill C-11, which includes parody or satire as a new enumerated purpose for fair dealing, had these cases been heard today, they might have had a different outcome. For future cases, fair dealing will likely be hailed as a user’s right rather than a legal loophole, consistent with CCH.

How will this decision affect consumers? According to SOCAN, it won’t. In a statement released 13 July 2012, SOCAN addressed the question of whether music purchases can look forward to lower prices:

“A decision to take away the right of our members to collect royalties from downloads may mean that approximately three cents from a song will not be collected for the composers who made the work. If this is the case, consumers should not rejoice. It is unlikely that businesses would pass along those savings to consumers, rather than maintain the same prices and increase their own profitability. This was about big businesses trying to increase their profitability at the expense of the creative community.”

“To the best of our knowledge, there’s no significant difference in price point for business models in countries that do not collect this small royalty payment, compared with countries that do have it. In those instances, that means that consumers are not seeing a savings and composers are not receiving compensation. To us, that is unfair.”

However, while consumers may not necessarily see any decrease in prices, they may still benefit from the decision. Had the tariff been allowed, it is possible that “[d]ownload services would either have dropped previews entirely or, more likely, would have kept them but raised prices on the downloaded items themselves.” Either of these options might have resulted in a decrease in sales. Since SOCAN charges a quarterly fee of 3.1% of the amount paid by the consumer per download, a reduction in sales might actually hurt them more than losing the preview tariffs.

 

 

Nancy Situ is a JD candidate at Osgoode Hall Law School.

One Comment

Comments are closed.