The Fivefecta: Canada’s Supreme Court Releases 5 Significant Copyright Decisions

Without a background in horse racing, I feel comfortable expressing today as a “Fivefecta”. Since Monday’s announcement that the Supreme Court of Canada (“SCC”) would release judgments in five critically important copyright appeals heard on December 6 and 7, 2011, there has been a growing excitement in the Copyright community. The decisions from these appeals, which arose out of proceedings from the Copyright Board of Canada, were released at 9:45am this morning and are already being viewed as significant victories for fair dealing and user’s rights. In addition, Osgoode IP professors David Vaver, Giuseppina D’Agostino and Carys Craig were cited throughout the decisions. Below are some first impressions from today’s monumental copyright pentalogy.

 

Province of Alberta as represented by the Minister of Education et al v Canadian Copyright Licensing Agency operating as “Access Copyright”

Held: Appeal allowed and the matter to be remitted to the Board for reconsideration based on the majority’s reasons.

Majority [5]: Written by Abella J McLachlin CJ and LeBel, Moldaver and Karakatsanis JJ concurring.

Dissent [4]: Written by Rothstein J – Deschamps, Fish and Cromwell JJ concurring in dissent.

The issue in the Access Copyright appeal was whether photocopies made by teachers, which were distributed to students as part of class instruction, could be considered fair dealing under s. 29 of the Copyright Act. The Canadian Copyright Board, under their powers granted by the Copyright Act, had previously certified a tariff in regards to royalties for photocopies of portions of textbooks or other published works. During the certification process, the parties divided the photocopies into four categories: the first three involved the teacher making copies for themselves, or at the request of a student. All parties agreed that these categories constituted fair dealing.

The fourth category, the one at issue in the appeal, dealt with copies of works which were made at the teachers’ own initiative and distributed to the students with instructions to read the material for class. The Copyright Board accepted Access Copyright’s argument that the fourth category did not meet the fair dealing test as expressed in CCH. The Coalition of provincial school boards argued that the additional 16.9 million pages of copying in Category 4, plus the 1.7 million pages in categories 1-3, all constituted fair dealing under ss. 29 or 29.1 of the Copyright Act.

Abella J accepted that the photocopying was done for the acceptable purposes of “research or private study”, and therefore, the focus was whether photocopying by teachers and assigning the material to a student could meet the second step of the CCH fair dealing test. At para 15, Abella J illustrated the issue with the Board’s approach to the “purpose of the dealing” factor under the CCH fairness analysis. Previously, the Board and the Federal Court of Appeal held that the Category 4 copies that were not made as a result of a student’s request were no longer for the purpose of “research or private study” and their predominant purpose was “instruction” or “non-private study”. Abella J reinforced that fair dealing is a “user’s right” and the relevant perspective when considering the purpose of the dealing is the user (which in this case was the student).  However, despite the strong dicta regarding user’s rights, Abella J clearly stated that “copiers cannot camouflage their own distinct purpose by purporting to conflate it with the research or study purposes of the ultimate user” (at para 21).

According to this view, the dealing’s true purpose should be assessed from the perspective of the user; however the copiers motivations are still relevant, as the copier cannot utilize the user’s fair dealing to engage in a separate activity that might not be fair, such as commercial use. “[T]his does not mean, however, that the copier’s purpose is irrelevant at the fairness stage. If, as in the “course pack” cases, the copier hides behind the shield of the user’s allowable purpose in order to engage in a separate purpose that tends to make the dealing unfair, that separate purpose will also be relevant to the fairness analysis” (at para 22).

The SCC held that there were no separate purposes on the part of the teachers which would hinder a finding of fairness. The court characterizes Category 4 copies as facilitating students’ research and private study. The teachers’ copies could not be viewed as a completely separate purpose, namely that of “instruction”, and there were no ulterior motives when teacher’s provided copies to students. The court illustrated that students likely do not have the expertise to find or request the material on their own, and rely on teachers to provide additional texts for educational purposes. At para 23, Abella J stated “[students] study what they are told to study, and the teacher’s purpose in providing copies is to enable the students to have the material they need for the purpose of studying.  The teacher/copier therefore shares a symbiotic purpose with the student/user who is engaging in research or private study.  Instruction and research/private study are, in the school context, tautological.”

The Board’s approach of categorizing copies made at the request of the student (Categories 1-3), and copies made by the teacher without a prior student request (Category 4), was held to drive “an artificial wedge into these unified purposes” (at para 24). In all the categories of copying, the copies provided to students were viewed by the SCC as “an essential element in the research and private study undertaken by those students”. Furthermore, the SCC stated expressly that students in a classroom setting can engage in “private study” since this term does not require the work to be utilized in isolation. “By focusing on the geography of classroom instruction rather than on the concept of studying, the Board again artificially separated the teachers’ instruction from the students’ studying.” (at para 27)

In regards to the “amount of the dealing”, which was also discussed in the companion case SOCAN v Bell, Abella J stated the “amount” factor is not a quantitative assessment based on aggregate use. The “amount” factor is a proportional analysis between the amount copied and the entire work and does not require the overall quantity of what is dissemination to be considered. The overall quantity of pages copied is to be considered under the “character of the dealing”. Furthermore, due to a lack of evidence presented by Access Copyright to demonstrate a causal relationship, the SCC rejected the argument that the photocopying of textbooks was the cause of the 30% decrease in textbook sales over the past 20 years. Thus, Abella J was not persuaded that the “effect of the dealing on the work” mitigated against a finding of fairness.

Another CCH factor which, in the opinion of the SCC, was erroneously applied, was the “alternatives to the dealing”. The Board held that educational instructors and institutions had an alternative to photocopying textbooks: buying the original textbooks and distributing them to students or placing them in the library. Abella J stated that it is unrealistic for teachers providing short excerpts to purchase multiple copies of the entire textbook. In addition to having already purchased the textbook to make the copies, the copies were only of short portions which Abella J viewed as “reasonably necessary to achieve the ultimate purpose of the students’ research and private study” (at para 32).

Based on the misapplication of the CCH factors, the majority allowed the appeal with costs and remitted the matter to the Board for reconsideration.

The dissenting opinion, written by Rothstein J would have upheld the Board’s decision based on administrative law principles. Relying on Dunsmuir v New Brunswick, the dissent was of the opinion that the Board’s process was “intelligible, transparent and justifiable” and fell within the possible, acceptable outcomes. The dissent held the Board’s conclusion, that a teacher’s purpose was predominate over the student’s purpose, was not unreasonable and should not be overturned. In addition, Rothstein J held that the distinction between Category 1-3 copies, and Category 4 copies was a realistic assessment of the facts and circumstances, and was not unreasonable. More so, the dissent agreed with the distinction between “private study” and “non-private study”, and agreed that the Board could equate “instruction” with “non-private study”.

In agreeing with the Federal Court of Appeal (“FCA”), the dissent was of the opinion that studying in a classroom is not private study since private study refers to a “scholar or student dealing with a work for his individual study” (at para 49). Under this view, while “private study” can occur with a few scholars or students, copies made in a school, school district or across a province are “non-private” studying. Furthermore, the dissent was willing to defer to the Board’s application of the CCH fairness factors, as Rothstein J was not persuaded that the Board’s analysis of the six factors were unreasonable.

The majority’s decision in this case is an example of the SCC embracing the “large and liberal interpretation” of allowable fair dealing purposes under the Copyright Act. Although Rothstein J provided a strong dissent, the dissent is unlikely to be relevant in future cases due to Bill C-11’s recent inclusion of “education” into the Copyright Act’s fair dealing exception. With the express inclusion of “education” as an acceptable fair dealing purpose, combined with this morning’s Access Copyright ruling, it is unlikely that issues regarding whether copying is “private study” or “non-private study” will resurface, as “non-private study” may still be considered “educational” in this context.

Although the geography of the classroom instruction will no longer be relevant for future fair dealing analyses, the “amount of the dealing”, which is a proportionality exercise between the excerpted copy and the entire work, and the “character of the dealing” will remain important factors for future educational fair dealing cases. Much of today’s decision brings into question whether or not copyright collectives such as Access Copyright will be able to collect any substantial future remuneration for educational use, as many uses of educational material are now likely to be fair dealing under Canada’s current copyright regime. The court, by endorsing fair dealing in the educational context, therefore calls into question the value of the model license signed by many Canadian universities.

Editor’s note: The Supreme Court of Canada did not make a definitive ruling on the issue of fair dealing. Rather, the Court held that the Copyright Board’s finding of unfairness was based on a misapplication of the fairness factors enunciated in CCH Canadian Ltd. v. Law Society of Upper CanadaThe Court therefore remitted the case back to the Copyright Board for reconsideration as to whether photocopies made by teachers to distribute to students as part of class instruction at the primary and secondary level are subject to a tariff.   See Alberta (Education) v. Canadian Copyright Licensing Agency (Access Copyright), 2012 SCC 37 at paras. 37 – 38.

 

Society of Composers, Authors and Music Publishers of Canada et al v Bell Canada et al

Held: Appeal dismissed. The use of song previews constituted fair dealing for the purpose of research.

Majority [9]: Written by Abella J – McLachlin CJ and LeBel, Deschamps, Fish, Rothstein, Cromwell, Moldaver and Karakatsanis JJ concurring.

SOCAN v Bell involves an appeal from a decision by the Copyright Board and the FCA. The Board, while certifying a tariff for the public communication of musical works over the Internet between 1996 to 2006, did not require royalties to be paid to SOCAN for 30 to 90 second previews of songs. Many online music services that sell downloads of digital music offer users the ability to preview a work before purchasing it. The previews are streamed to the user, meaning no permanent copy is stored on the user’s device. Both the Board and the FCA held that previews were not an infringement of copyright, as their use was “fair dealing” for the purposes of research under section 29 of the Copyright Act. The SCC unanimously upheld the previous decisions.

Abella J begins the analysis in SOCAN by illustrating the progression of Canada’s copyright regime. Prior to Théberge v Galerie d’Art du Petit Champlain inc, Canadian courts were more “author-centric” in regards to copyright protection: “any benefit the public might derive from the copyright system was only a ‘fortunate by-product of private entertainment” (at para 9). However, Théberge and CCH focused on “the importance copyright plays in promoting the public interest, and emphasized that the dissemination of artistic works is central to developing a robustly cultured and intellectual public domain.” According to Abella J, fair dealing, which must not be interpreted restrictively, is one of the tools employed to achieve a balance between these two ideals in the copyright act.

In applying the two-step CCH test, the court in SOCAN followed McLachlin CJC’s dicta from CCH, by ensuring research receives a “large and liberal interpretation in order to ensure that users’ rights are not unduly constrained” (at para 51 CCH, at para 15 SOCAN). The court held that research had been defined in CCH in a liberal manner, which allows a use to be classed as an acceptable purpose at the first stage of the CCH test, but allows the court to find against fairness under the six factors in stage 2. The SCC rejected SOCAN’s argument that research’s primary purpose must be to foster creativity, as opposed to enabling users to purchase music. At para 21, the court held that it is inconceivable that only research for creative purposes would qualify as “research” under s. 29. “To do so would ignore the fact that the dissemination of works is also one of the Act’s purposes, which means that dissemination too, with or without creativity, is in the public interest.”

According to the SCC, research can “be piecemeal, informal, exploratory or confirmatory. It can, in fact, be undertaken for no purpose except personal interest” (at para 22). At para 28, the court expressed that the purpose of the research is to be viewed from the perspective of the user at the first stage of the fair dealing analysis. Research should not be viewed from the service provider’s point of view (at para 34) and may be done for commercial reasons (at para 36). The court was satisfied that the Board had properly considered “research” from the perspective of the user and concluded that previews facilitate the research purposes of the consumer.

Furthermore, the SCC reaffirmed the differences between American “fair use” and Canada’s “fair dealing” provisions. “…[T]his Court has previously cautioned against the automatic portability of American copyright concepts into the Canadian arena, given the “fundamental differences” in the respective legislative schemes. This caution has resonance in the fair dealing context” (at para 25). The SCC illustrates the differences between the open-ended American “fair use” provisions, which do not require an enumerated acceptable purpose to commence a fairness analysis, and the Canadian CCH test which requires an acceptable purpose at step 1 before inquiring into the six fairness factors discussed in CCH.

Once the SCC held that previews of musical works were acceptable fair dealing purposes under s. 29 of the Copyright Act, the court applied CCH’s six fairness factors in order to determine if the use of previews was fair. In its analysis, the court clarified that the “amount of the dealing” should be assessed based on individual use, and the appropriate measure under this factor was the proportion of the excerpt used in relation to the whole work. In addition, the court stressed the goal of technological neutrality, “which seeks to have the Copyright Act applied in a way that operates consistently, regardless of the form of media involved, or its technological sophistication” (at para 43).

The court rejected that alternatives, such as advertising or return policies, could be reasonable alternatives to previewing. Since the previews are short, low-quality streams, they were held to be reasonably safeguarded to ensure their use remained for the purpose of research and are “reasonably necessary to help consumers research what to purchase” (at para 46). Lastly, it cannot be said that previews compete in the market place with the download itself. “Since the effect of previews is to increase the sale and therefore the dissemination of copyrighted musical works thereby generating remuneration to their creators, it cannot be said that they have a negative impact on the work” (at para 48).

The court’s confirmation, and associated dicta, that previews satisfy the fair dealing requirements for the purposes of research is a landmark decision confirming the low threshold to commence the fair dealing analysis. Although the SOCAN case illustrates that research can be done for a commercial purposes, the case’s biggest impact will be it’s strong language regarding the large and liberal interpretation of fair dealing. The court expressly noted the evolution of Canada’s copyright regime and the importance of creating a proper balance between authors’ exclusive economic rights and users’ rights. Abella J focused on ensuring that user’s rights are not unduly constrained, which ensures that a user’s use is more likely to be classed as an acceptable fair dealing purpose at the first step of the CCH analysis, and allows the court to utilize the six fairness factors in step 2 to discern the fairness of the use.

 

Entertainment Software Association et al v Society of Composers, Authors and Music Publishers of Canada

Held: The Copyright Board’s conclusion that Internet delivery of a permanent copy of a video game containing musical works amounted to communication under s 3(1)(f) of the Copyright Act is set aside.

Majority [5]: Written by Abella and Moldaver JJ – McLachlin CJ and Deschamps and Karakatsanis JJ concurring

Dissent [4]: Written by Rothstein J – LeBel, Fish and Cromwell JJ concurring.

The owners of copyright in musical works negotiate royalties for the reproduction of any music which is incorporated into video games prior to release of the games. The issue in ESA v SOCAN was whether the s. 3(1)(f) right to communicate to the public by telecommunication is triggered when the work is sold over the Internet instead of in a physical store. While royalties for the reproduction of the musical works contained in the video games were negotiated before the games were sold to the public, at issue in ESA was whether a new economic right, the right to communicate the work to the public by telecommunication, was triggered when a video game was downloaded. Although the Copyright Board and FCA approved a new fee payable when video games are sold over the Internet, the SCC held these previous decisions violated the principle of technological neutrality.

In agreeing with the ESA, the court held that a “download” is merely an “additional, more efficient way to deliver copies of the games to customers” (at para 4). Since the game publishers already pay copyright owners reproduction royalties for all copying activities, the act of downloading was viewed by the SCC as another reproduction which has already been negotiated for. The inclusions of a separate “communication” tariff violated technological neutrality, since it would apply the Copyright Act unequally between traditional and more technologically advanced forms of delivering the same media.

The SCC held that s. 3(1) of the Copyright Act, which describes the production and reproduction rights as the right to produce or reproduce “in any material form whatever”, does not create a practical difference between buying a physical copy or downloading one from the Internet. “The Internet is simply a technological taxi that delivers a durable copy of the same work to the end user” (at para 5). The SCC further stated “[t]he principle of technological neutrality requires that, absent evidence of Parliamentary intent to the contrary, we interpret the Copyright Act in a way that avoids imposing an additional layer of protections and fees based solely on the method of delivery of the work to the end user.  To do otherwise would effectively impose a gratuitous cost for the use of more efficient, Internet-based technologies” (at para 9).

The court held that communication of a work is a performance-based activity, which means that there must be a communication of a work via radio waves, cable or similar technologies that may be used in the future, outside of a private setting. As such, the court overturned the Board and FCA’s decision that transmitting a download of a musical work over the Internet could amount to a “communication”. While the act of streaming music is more akin to broadcasting or performance and therefore attracts an additional royalty, the court expressly rejects a download as a communication to the public via telecommunication (at paras 32-38).

In considering the communication right, the court stated that Binnie J’s observations from Society of Composers, Authors and Music Publishers of Canada v. Canadian Assn. of Internet Providers, where it was held a work was “communicated” when “[a]t the end of the transmission, the end user has a musical work in his or her possession that was not there before” were simply made in obiter and did not examine the legislative history behind the term “communicate” or its connection with performance (at para 30).

Before overturning the Board’s conclusion that an Internet download of a video game containing musical works amounted to a “communication” under s. 3(1)(f), the majority of the court addressed an interesting point in regards to the copyright owner’s economic rights under s. 3. At para 42, the majority held that the production, reproduction, performance and publication rights provide the basic structure of copyright while the enumerated rights listed in paragraphs (a) through (i) are simply illustrative examples and are not independent rights of their own.

In the 5-4 decision, a strong dissent was written by Rothstein J, who was of the opinion that downloading video games which contain musical works causes the musical works to be reproduced and communicated. The dissent were not persuaded that the right to communicate was distinct from the reproduction right and argued that SOCAN was entitled to remuneration for both exclusive rights. In addition, the dissent were critical of the majority’s embracement of technological neutrality, arguing that technological neutrality is not a “statutory requirement capable of overriding the language of the Copyright Act” (at para 49).

The dissent and majority decisions are directly at odds with each other. While the majority’s decision focuses on the Internet as a “technological taxi” which simply supplies the video game to the end consumer, the dissent states “taxis need not give free rides” (at para 50). The dissenting opinion is focused on the fact that the Internet has communicated the video game to the consumer, and the musical works which are contained have been communicated to the public via telecommunication. Despite the dissent’s contention that technological neutrality should treat the Internet as a “method of delivery” of the work, the majority ruled that a download is a reproduction which precludes the communication of the work to the public via telecommunication. By eliminating the distinction between purchasing a physical copy of a game and purchasing a downloadable version of a game, Canada’s copyright regime remains technologically neutral and receptive to innovative online platforms which deliver digital works to consumers.

 

Rogers Communications Inc et al v Society of Composers, Authors and Music Publishers of Canada

Held: Streaming a musical work from the Internet is not a private communication. Online music services engage the exclusive right to “communicate to the public by telecommunication” by streaming a musical work in spite of where the members of the public receive the communication.

Majority [8]: Written by Rothstein J – McLachlin CJ and LeBel, Deschamps, Fish, Cromwell, Moldaver and Karakatsanis JJ concurring)

Concurring Reasons [1]: Abella J

At issue in Rogers v SOCAN was the meaning of “to the public” in s. 3(1)(f) of the Copyright Act. As mentioned above, the majority in ESA v. SOCAN held that a work is not communicated by telecommunication when the work is downloaded. Thus, the issue of “to the public” in regards to online music services who provide permanent downloads of works becomes moot. However, the issue remained whether streaming a work through on-demand music services was a communication to the public via telecommunication within the meaning of s. 3(1)(f). Rothstein J held this appeal raised an “extricable question of law”, since it required the court to determine whether a point-to-point transmission could ever constitute a communication “to the public” with the meaning of s. 3(1)(f) (at para 20).

The court considered CCH’s discussion of “to the public”. In CCH, McLachlin CJ held that “a series of repeated fax transmission of the same work to numerous different recipients might constitute communication to the public in infringement of copyright”. The issue in applying this concept to the current facts was whether there was a requirement that the series of transmissions originate from a single act of the sender. In the view of the court, one should not focus on the individual transmission from the sender’s view. A “broader context” is required “to determine whether a given point-to-point transmission”  (at para 30).

Endorsing Sharlow JA in Canadian Wireless Telecommunications Assn v Society of Composers, Authors and Music Publishers of Canada, the court held that a person transmitting a particular work simultaneously to all customers who have requested it have communicated the work to the public (at para 31) and that communication is not restricted to a purely non-interactive context (at para 35). Thus, where “a series of point-to-point communications of the same work to an aggregation of individuals is found to exist, it matters little for the purposes of copyright protection whether the members of the public receive the communication in the same or in different places, at the same or at different times or at their own or the sender’s initiative” (at para 52).

In addition to reinforcing technological neutrality (paras 36-40), the court expressly held that in this particular case, the transmission of musical works could be “nothing other than communication ‘to the public’” (at para 53). Citing Professor Vaver, the court stated “[i]f the content is intentionally made available to anyone who wants to access it, it is treated as communicated “to the public” even if users access the work at different times and places”.

In her concurring reasons, Abella J agreed with the majority that streams were point-to-point communications from online services providers to the public yet disagreed with the standard of review. Similar to her decision in Access Copyright, Abella J was of the opinion that the reasonableness standard should be applied, as opposed to the correctness standard applied by the majority.

Intuitively the court’s decision in Rogers captures services which upload content with the aspiration that it will be viewed by many, even if each view requires an individual’s request. However, cloud streaming solutions, where the user uploads the content themselves and stream the work themselves, are unlikely to be communications “to the public” since those who request the stream from the cloud are members of a narrow group. This is in line with the Copyright Act’s dual purpose of promoting the public interest in the encouragement and dissemination of works and obtaining a just reward for the creator (Théberge at para 30).

 

Re:Sound v Motion Picture Theatre Associations of Canada et al

Held: “Soundtrack” includes pre-existing sound recording and these recordings are excluded from the definition of “sound recording” when they accompany a cinematographic work. Performers and makers of sound recordings are not entitled to remuneration when the song is included on a cinematographic work’s soundtrack which is performed in public.
Reasons [9]:
Written by LeBel J – McLachlin CJ and Deschamps, Fish, Abella, Rothstein, Cromwell, Moldaver and Karakatsanis JJ concurring.

All 9 justices agreed that Re:Sound v Motion Picture was an appeal concerning the interpretation of the definition of “sound recording” in the Copyright Act and the undefined term “soundtrack”. Section 2 defines “sound recording” as meaning “a recording, fixed in any material form, consisting of sounds, whether or not of a performance of a work, but excludes any soundtrack of a cinematographic work where it accompanies the cinematographic work”.

In their decision, the Copyright Board held that once the performers and makers of sound recordings have authorized the inclusion of a sound recording in a music soundtrack, they are precluded from exercising both their copyright and remuneration right when the soundtrack accompanies the movie. This view was upheld by the FCA who were of the opinion that a pre-existing sound recording, which was extracted from the cinematographic work’s soundtrack, would attract the protection of a stand-alone sound recording.

The SCC held that a “soundtrack” is a “sound recording” except where it accompanies a motion picture (at para 35). When the recording of sounds accompanies a motion picture (i.e. a video), the soundtrack does not fall within the definition of “sound recording”. Therefore, a pre-existing sound recording is well within the meaning of “soundtrack” (at para 36).

 

The “Fivefecta”

Today’s copyright decisions offer clarification in regards to many pressing copyright issues. Proponents of fair dealing and technological neutrality are well armed with strong dicta from Justice Abella to combat future allegations of copyright infringement. Although Bill C-11 will grant additional acceptable fair dealing purposes to Canada’s copyright regime, it is interesting to note the alignment of Justices in today’s five decisions.

While the SCC is not divided ideologically in the sharp way that the US Supreme Court is, the above cases were the first copyright decisions ruled on by Justices Karakatsanis and Moldaver. In three cases, Re:Sound v Motion Picture, Rogers v SOCAN and SOCAN v Bell, all nine justices agreed on the substantive copyright issues. In the two cases where there was a 5-4 split, ESA v SOCAN and Access Copyright, both Justices Karakatsanis and Moldaver agreed with the majority opinions, which advocated for technological neutrality in Canada’s copyright regime and a liberal interpretation of fair dealing. In fact, Justice Moldaver co-wrote ESA v SOCAN with Justice Abella… perhaps hinting at the next Supreme Court of Canada Justice who will be often quoted in copyright litigation.

 

 

Adam Jacobs is a JD candidate at Western University, Faculty of Law.

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