Thursday, April 26, 2007

ASCAP ruling - effect on Canada?

Yesterday’s (April 25, 2007) decision of the District Court of the SDNY ("Southern District of New York"), which is probably the most experienced and reliable trial court in the USA for copyright matters, will send shivers or even shocks throughout the American music industry and may have interesting and potentially very significant ripple effects up here in Canada.

The Court held - in a summary judgment hearing - that ASCAP (one of the US big American cousins of SOCAN), could not collect money for downloads of music from the Internet.

Why not? Because this activity doesn't fit the wording of the statute - which is as follows in 17 U.S.C. §106(4):

“[T[he owner of copyright under this title has the exclusive rights to do and to authorize any of the following:

(1) to reproduce the copyrighted work in copies or phonorecords;

(2) to prepare derivative works based upon the copyrighted work;

(3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;

(4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly;

(Emphasis added)

In turn, to perform or display a work “publicly”means:

To perform or display a work “publicly” means —

(1) to perform or display it at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered; or

(2) to transmit or otherwise communicate a performance or display of the work to a place specified by clause (1) or to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times.

The Court looked carefully at the meaning of “perform”, “publicly”, etc. and the difference between the performance and reproduction rights. It noted that there theoretically could be an overlap but that the “sweeping construction” of the statute and the “overlap to the extent proposed by ASCAP in the present case” didn’t fit with the intention of the statute.

Some choice quotes:
Although we acknowledge that the term "perform" should be broadly construed, see United States v. Am. Society of Composers Authors & Publishers, 870 F. Supp. 1211,1218 (S.D.N.Y. 1995) (Conner, J.), we can conceive of no construction that extends it to the copying of a digital file from one computer to another in the absence of any perceptible rendition. Rather, the downloading of a music file is more accurately characterized as a method of reproducing that file. See 17 U.S.C. § 1 06( 1) ("(The owner of copyright under this title has the exclusive rights to do and to authorize any of the following: ... (1) to reproduce the copyrighted work in copies or phonorecords .... ").
The statutory language itself, however, makes clear that the transmission of a performance, rather than just the transmission of data constituting a media file, is required in order to implicate the public performance right in a copyrighted work. See 17 U.S.C §101 ("To perform or display a work 'publicly' means ... to transmit or otherwise communicate a performance or display of the 'work . , . to the public, by means of any device or process .... ") (emphasis added); 17 U.S.C. § 101 ("To 'transmit' a performance or display is to communicate it by any device or process whereby images or sounds are received beyond the place from which they are sent. ")


[W]e are not persuaded by ASCAP's argument that downloaded music files are indistinguishable from streamed performances because, after a certain amount of digital data has been transmitted to the client computer, the purchaser can begin listening to the transmitted portion of the music file. However, the mere fact that a customer's online purchase is conveyed to him in a piecemeal manner, each segment of which is capable of playback as soon as the transmission is completed, does not change the fact that the transaction is a data transmission rather than a musical performance broadcast.

Accordingly, we agree with the position set forth in the brief of the Recording Industry Association of America, Inc. ("RIAA") as amicus curiae, which contends that the delivery of a music file to a purchaser via a download constitutes a mechanical reproduction of the copyrighted work in the form of a "digital phonorecord delivery,m as set forth in 17 US.C. § 115(d).

Of course, US law is different than Canadian in this area where every detail matters and Canada went to some efforts to try to avoid the type of conclusion reached here. But was Canada successful?

I don’t know - but I do know that many of us now should be looking at this question yet again - and urgently.

The Copyright Board and the Canadian courts need to be very concerned about unwarranted overlapping and layering of rights, especially if the rights truly are not applicable. It is not in anyone's ultimate interest for this problem to proliferate.

One can assume that yesterday’s decision will be appealed. The Court and the Counsel involved were a substantial who’s who of US copyright law. So yesterday’s decision must be taken very seriously. Canadian SOCAN was sufficiently concerned that it filed an amicus brief, which is quite rare for a Canadian entity to do at an early stage - or indeed any stage - of an American IP case.

These decision should be of intense interest to those now involved in the Canadian Copyright Board’s Tariff 22 hearing, where SOCAN is seeking what ASCAP it has now been denied in the USA, and the judicial review of the Ring Tones decision.

Oddly enough, RIAA, as an amicus curiae, opposed ASCAP on this fundamental legal entitlement issue in the USA - i.e. whether ASCAP could claim an overlapping “performance” right when the issue was really one of reproduction. In Canada, CRIA appears not to be raising the “communication” point in Tariff 22 or to be challenging SOCAN on any substantive question of legal entitlement, but rather is engaged only in questioning the quantum and SOCAN's basis for its calculation.

(revised May 8, 2007)

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