Monday, September 15, 2008

Ringtones - Supremes to Rule on Leave Application

We shall find out this Thursday, September 18, 2008 shortly after 9:45 AM whether the Supreme Court of Canada (hereinafter “the Supremes”) will hear an appeal concerning the Copyright Board's Ringtones Tariff payable to SOCAN. The main issue is whether the delivery of ringtones by a provider to the customer's telephone or to the customer's computer upon request constitutes a "communication to the public by telecommunication."

While the narrow legal issues are highly technical, the ramifications entail the potential imposition of multiple layers of payment to multiple claimants for multiple rights involving the same activity and transaction. The concept of “double payment” could become “triple” or more. The “making available” right may some into play if the case is heard.

The three dozen or so collectives in Canada and the oversight provided by the Copyright Board are supposed to simplify the legal landscape and reduce transaction costs so that creators can be paid more efficiently for their efforts and avoid market failures. Canada has more collectives and a larger full time Copyright Board with far more full time resources than any other comparable tribunal in any comparable country.

So far, the result has been excellent for a small number of lawyers and consultants but is of questionable benefit overall to most actual creators, who have seen very little if any money from most of this adversarial and litigious activity.

Since various governments have succeeded only in adding to this complex labyrinth, perhaps only a judicial commission can see beyond the box and sort out and simplify this morass. As matters stand, there are too many vested interests that benefit from the current state of uncertainty. Nothing in the last two Bills - the Liberal’s C-60 or the Conservatives Bill C-61, which both died with election calls, would have clarified this situation. In fact, Bill C-61 would have created the possibility of several new tariffs and the inevitable lengthy hearings and judicial review.

If the Supremes hear this case and reverse the result below, there could be a significant domino effect on subsequent Board matters, including the seemingly perpetual SOCAN Tariff 22 hearing, which is now about thirteen years old and far from resolved. In fact, it is also under judicial review. Time for a Tariff 22 Bar Mitzvah? See my comments on the tie in between the Ringtones matter and Tariff 22 here.

I should confess that I was involved in the Ringtones file at an early stage, but my client, a very major American supplier of ringtones with extensive knowledge of the market and issues, decided to withdraw, as have other major parties involved in Copyright Board hearings who might have brought useful evidence and insights to the table.

Inexplicably, the remaining objectors (the Canadian Wireless Telecommunications Association or “CWTA”) decided to concede at the Board hearing that the delivery of the ringtone files music files in response to consumer orders was indeed a “communication by telecommunication.” As the Board put it:

They concede that downloading a ringtone is a
communication by telecommunication but
contend that the communication is not a public
communication, but a private transaction
between a vendor and a purchaser and as such, is
not protected by copyright.

I have blogged about the Board’s decision at length here, here and here.

The CWTA lost its judicial review attempt in the Federal Court of Appeal on January 9, 2008, as reported here.

The FCA apparently gave full consideration to the new argument reversing the CWTA’s previous concession, even though it was raised for the time only at the appellate stage. However, one cannot help but wonder whether a different record from below based upon the “no communication” theory might have helped the CWTA on its judicial review - or even have led to a different result at the Board.

This file has already had a more than the usual twists and turns in the Supreme Court, with both sides attempting to strike out some or all of each another’s affidavit material.

The Supremes have decided half a dozen major copyright cases since 2002. Before that, they heard about one every decade or so. Will they bite again this year? We’ll know soon enough. Here’s the Supremes’ summary of the case.


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