Friday, August 30, 2013

Levy on blank CDs to continue – but Board Says “No” to microSD levy

The Copyright Board has decided to continue the levy on blank CDs until 2014 at the current rate of $0.29 per CD. This will provide a small amount of revenue to the CPCC, as long as blank CDs are being sold in Canada in any quantities, which may not be for very long. CPCC's latest disclosed revenues are for 2011, and were less than $13 million and declining rapidly as the medium becomes obsolete.

The Board has also decided that it will not proceed with Phase II of the process of setting a levy for microSD cards. It will be recalled that the Government published a regulation on November 7, 2012 prescribing that microSD cards are excluded from the definition of “audio recording medium”.

While the Board concluded that it still had the jurisdiction to proceed with the process of awarding a retroactive tariff for approximately 10 months in 2012, it chose not to do so. In the Board’s words:

[86] Private parties are free to litigate even when this makes no economic sense. An application before the Board is not a civil cause of action. We must balance competing interests, some of which are not represented. As an economic regulator, we must heed economic considerations. Any “friction” that may result from the retroactive collection of royalties is a relevant consideration in deciding whether it is possible to certify a fair and equitable tariff in the first place. A new tariff (or a rate increase) can be phased in to make it more acceptable. A completely retroactive tariff cannot be phased in.

[89] When taken as a whole, the circumstances of this case make any attempt at certifying a fair and equitable tariff for microSD cards impossible. The determination, implementation and enforcement of any potential tariff will almost inevitably be largely futile, certainly unfair and considerably disruptive. This is an exceptional situation, one that lends itself to the proper exercise of our discretion to refuse to certify a tariff not because of a lack of evidence, but because any tariff we would set would be, under these very special circumstances, manifestly unfair and inequitable.


(I should point out that I acted for the Retail Council of Canada in this matter. However, my comments are solely my own.)

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