Thursday, July 12, 2012

A Proud and Progressive Pentalogy Day in Canadian Copyright Law

The following will be updated as I read and digest today’s landmark pentalogy of Supreme Court of Canada Copyright judgments, which all involve collectives and emanate from the Copyright Board. These cases were heard back to back in a unique two day marathon on December 6 and 7, 2011. My comments are in blue.(Disclosure - I acted along with Prof. Ariel Katz for the Centre for Innovation Law and Policy, an intervener in the K-12 case).

Some of the key particular themes of the Supreme Court of Canada’s landmark set of five simultaneous copyright rulings are:
  • Collectives cannot assume that they will be entitled to an additional "layer" of remunerated rights every time  there is a new method of delivery. Technological neutrality matters.
  • The Court said what it meant and meant what is said in CCH v. LSUC in 2004 and will move forward from there - not be pushed backwards. Users have rights that must be given a "large and liberal interpretation". Copyright doesn't exist solely for collectives. 
  • Educators are in a "symbiotic" relationship with students and the Copyright Act serves the goal of education, which includes access to essential material. "Instruction and research/private study are, in the school context, tautological."
  • Copyright law is both about "protection" and "access"  
  • Copyright law is about "dissemination"
  • "Research" is not restricted to "creative purposes". Consumer research counts too. Research can even be for "personal interest". There is no absolute requirement for "transformative" use in Canada
  • The user's purpose is the one that counts in fair dealing
  • Practices that increase the sale of work cannot be said to have a negative impact on the work
  • The concept "public" must be considered in light of new technology, technological neutrality and the purpose of the legislation. The fact that communication may be interactive on an individual basis does not mean that it cannot be considered to be to the "public"
  • When the statute uses a word such as "excludes", it means it. The word is not superfluous.
  • Parliament did not intend to "recognize a superior expertise of the Board relative to the courts with respect to legal questions arising under the Copyright Act". On copyright questions of "first instance", the Board will get no more deference that any court would get. In other words, the Board must be "correct". It will not be sufficient that it merely be "reasonable"
  •  The 1916 University of London case has firmly and finally been laid to rest on the issue of "private" study in Canada. It had a long and seriously misunderstood life in this country. Frankly, far too long. This is a key conclusion and I am pleased to note that Ariel Katz and I made this a key submission on what turned out to be a key issue in paras. 10ff our intervener factum.
  • On the "standard of review" in fair dealing cases, Justice Abella for the majority stated that "Because the Board’s finding of unfairness was based on what was, in my respectful view, a misapplication of the CCH factors, its outcome was rendered unreasonable." As lawyers will know, that is a strong and significant statement that could have profound ramifications. It is a rare event when a reviewing court will find that the decision of a tribunal under review is "unreasonable". The message is clear. CCH is the law of the land in Canada. All concerned take notice.
Some key overall thoughts on a preliminary basis:
  • The Court seems to be rejecting attempts by collectives to overreach by seeking payment for activities
    •  simply because a technical reading of the act suggests that they can
    • where such payment would add an unnecessary "layer" that offends technological neutrality
    • where strained interpretation is urged upon old words based upon new technology
  • It will be hard for collectives to refute a finding of fair dealing in the absence of any evidence of economic harm and especially where the dealing may actually help the sales of the work, and encourage "access" and "dissemination"
  • The purpose of "users" is most important in determining fair dealing - whether it be in deciding what song to buy on iTunes or learning at all stages of education
  • The Copyright Board will be held to the same standard of review as any court when it comes to legal questions of first instance. The Board will be under more rather than less judicial scrutiny in the future.
  • Collectives will need to think more carefully about seeking controversial new "inaugural" tariffs
  • Canada's Supreme Court will continue to look at foreign copyright jurisprudence - but will not hesitate to disregard it when warranted.
 All in all - after 2.5 hours of quick reading and reflection:
  • A great day for education, innovation, user's rights, access, dissemination and that most over-used and frequently misused word in copyright conversation, namely "balance"
  • The Supreme Court of Canada continues its "Magna Carta" achievement in CCH v. LSUC and to be at the centre of the world's stage as the leading forum for an enlightened and evolutionary yet cautious and reasoned common law approach to copyright. 
  • We have two new major decisions on fair dealing, penned by Justice Abella. These will be very important both in Canada and abroad for years to come.
  • There were some thoughtful and important dissents, for example penned by Justice Rothstein in the K-12 decision and the ESA decision. (though he agreed with many of the important majority conclusions in K-12). These are constructive and useful.  Some of the most important copyright decisions in history had strong dissents - for example the 1984 Sony Betamax decision in the US Supreme Court. These are not black and white issues. Nobody expected today to be the end of these debates.
  • Today's decisions come at the perfect time to help us to deal with Bill C-11, once it is proclaimed.
  • While Bill C-11, when proclaimed, may render the ruling on "communication" somewhat moot in a technical sense at least on a going forward basis, the overall message about layering and technological neutrality will survive and will need to be taken into consideration by the Board in the next inevitable attempt to add to the revenues of the  collectives based upon the new "making available" right
  • Today's K-12 decision will doubtless be the most controversial and important  in the short, medium and long terms. In the short term, it completely undercuts any possible rationale for the AUCC model license deal and clearly raises the question of why AUCC couldn't have waited a few more weeks, when things could have realistically only gotten better than the results from below and both today's decision and the passage of Bill C-11 were about to unfold. Those institutions that have signed the AUCC model license are presumably locked in until the end of 2015. The UofT/UWO licenses at least had the virtue of a much shorter minimum term - namely until the end of 2013.
  •  A proud day for Canadian law and, indeed, for Canada 

Here are the specific results from the SCC’s unique five at once set of rulings on Canadian copyright law:
1.    Case: 33921
Court Summary:

Intellectual Property – Copyright – Whether a download of a video game that includes music is a communication of that music to the public by telecommunication within the meaning of para. 3(1)(f) of the Copyright Act, R.S.C. 1985, c. C-42 – Whether standard of reasonableness or standard of correctness applies on judicial review of Copyright Board’s decision that a download of a video game that includes music is a communication of that music to the public by telecommunication.

The applicants represent publishers, developers and distributors of interactive entertainment software products (primarily video and computer games). Their members collectively generate approximately 90% of North American interactive software product sales. On-line downloads of games generate approximately 5% of sales of interactive entertainment software products. On October 18, 2007, the Copyright Board released a decision stating the royalties to be collected for the communication to the public by telecommunication, in Canada, of musical or dramatic-musical works for the years 1996 to 2006: SOCAN Tariff 22.A (Internet Online Music Services).

Result: Court's Headnote

Held (LeBel, Fish, Rothstein and Cromwell JJ. dissenting):  The appeal should be allowed.

                    Per McLachlin C.J. and Deschamps, Abella, Moldaver and Karakatsanis JJ.: The Copyright Board’s conclusion that the Internet delivery of a permanent copy of a video game containing musical works amounted to a “communication” under s. 3(1)(f) of the Copyright Act should be set aside.

                    The Board’s conclusion that a separate, “communication” tariff applies to downloads of musical works violates the principle of technological neutrality.  This principle requires that the Act apply equally between traditional and more technologically advanced media forms.  There is no practical difference between buying a durable copy of the work in a store, receiving a copy in the mail, or downloading an identical copy using the Internet.  ESA has already paid reproduction royalties to the copyright owners for the video games.  Absent evidence of Parliamentary intent to the contrary, we interpret the 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.  The Internet should be seen as a technological taxi that delivers a durable copy of the same work to the end user.  The traditional balance in copyright between promoting the public interest in the encouragement and dissemination of works and obtaining a just reward for the creators of those works should be preserved in the digital environment.

                    The term “communicate” in s. 3(1)(f) is not defined in the Act, but the legislative history of the Act demonstrates that the right to “communicate” is historically connected to the right to perform a work and not the right to reproduce permanent copies of the work.  The 1988 amendment in the Act from “communicate . . . by radio communication” to “communicate . . . by telecommunication” does not demonstrate Parliament’s intent to remove all reference in s. 3(1)(f) to conventional performance or broadcasting activities, or to expand the communication right to technologies such as downloading that involve transmitting data in a way that gives end users a permanent copy of the work.  Instead, the replacement of the words “radio communication” with “telecommunication” should be understood as merely expanding the means of communicating a work — that is, from radio waves to cable and other future technologies.  By substituting the word “telecommunication” in 1988, Parliament did not intend to change the fundamental nature of the communication right, which has been concerned with performance-based activities for over 50 years.

                    Applying the dictionary definition of the word “communicate” has the effect of ignoring a solid line of legislative history connecting the term “communicate” to performance-based activities.  The term “communicate” in s. 3(1)(f) should not be transformed by the use of the word “telecommunication” in a way that would capture activities that resemble reproduction.  Such transformation would result in abandoning the traditional distinction in the Act between performance‑based rights and rights of reproduction.

2.    Case: 33922
Court Summary:

Intellectual Property – Copyright – Courts – Jurisdiction – Statutory Interpretation – Communication of a work to the public by telecommunication – Meaning of “copyright” in s. 3 of Copyright Act, R.S.C. 1985, c. C-42 – Interpretation of s. 3(1)(f) – Jurisdiction to interpret s. 3 – Test for when right to communicate a work to the public by telecommunication is engaged – Standard of review of interpretation of s. 3 – Balance between court’s supervisory powers and legislative supremacy – Scope of the supervisory role of the courts – Consistency in meaning given to exclusive rights granted by s. 3.

The applicants are internet service providers that provide consumers with the means to access the websites of online music service providers from which the consumers can download music files or streams to their computers or mobile devices. On October 18, 2007, the Copyright Board released a decision stating the royalties to be collected for the communication to the public by telecommunication of musical or dramatic-musical works for the years 1996 to 2006.


Court held that this was "to the public"....

NB re Standard of Review

Majority (per headnote)

  The appropriate standard for reviewing the Copyright Board’s decision in this case is correctness.  Normally, the legislature is presumed to have recognized the superior expertise of an administrative body in respect of issues arising under its home statute or a closely related statute, and deference warrants applying a reasonableness standard of review.  However, under the Copyright Act, Parliament has given both the Copyright Board and courts concurrent jurisdiction at first instance over questions of law such as the pure question of law that arises in this case.  It would be inconsistent to apply a reasonableness standard on judicial review of a decision by the Board when the same legal question would be decided de novo if it arose in the court at first instance.  It would be equally inconsistent to apply a reasonableness standard to a determination of a legal question by the Board on an appeal from a judicial review but a correctness standard on an appeal from a decision of a court at first instance on the same legal question.  Because the unusual statutory scheme under the Copyright Act does not give the Copyright Board a discrete and special administrative regime, it must be inferred that the legislative intent was not to recognize a superior expertise of the Board relative to the courts with respect to legal questions arising under the Copyright Act. 

3.    Case: 33800
Court Summary:

Intellectual Property – Copyright – Whether providing previews consisting of excerpts of works is fair dealing for the purpose of research that does not infringe copyright.

Some commercial internet sites that sell downloads of works allow users to preview the works. A preview typically consists of an extract taken from the work, for example a 30-second extract of a musical track, streamed online and accessible to consumers. On October 18, 2007, the Copyright Board of Canada released a decision stating the royalties to be collected for the communication to the public by telecommunication, in Canada, of musical or dramatic-musical works. In part, the decision addresses previews.

Court's Headnote:

Unanimous Decision

The first inquiry in this case is whether the previews are provided for the allowable purpose of “research” under the first step of the fair dealing test. The purpose of “research” should be analyzed from the perspective of the consumer as the ultimate user, not the online service provider. The Board properly considered the previews from the perspective of the consumer’s purpose, namely, conducting research to identify which music to purchase.
“Research” need not be for creative purposes only. Permitting only creative purposes to qualify as “research” would ignore the fact that one of the objectives of the Copyright Act is the dissemination of the works themselves. Limiting “research” to creative purposes would also run counter to the ordinary meaning of “research”, which includes many activities that do not require the
establishment of new facts or conclusions. The fair dealing exception must not be interpreted restrictively and “research” must be given a large and liberal interpretation.
The inquiry then moves to the second step set out in CCH, namely, determining whether the use of previews was “fair”. The factors to be considered in determining whether a dealing is fair are the purpose, character, and amount of the dealing; the existence of any alternatives to the dealing; the nature of the work; and the effect of the dealing on the work.
The Board properly concluded that previews constituted fair dealing. The guiding perspective is that of the ultimate user or consumer. The service providers facilitate the research purposes of the consumers. There are reasonable safeguards in place to ensure that the previews are being used for this purpose.
With respect to the character of the dealing, users do not keep a permanent copy of the preview, since the file is streamed and automatically deleted from the user’s computer once the preview is heard. As a result, copies cannot be duplicated or further disseminated.
The “amount of the dealing” factor should not be assessed on the basis of the aggregate number of previews that are streamed by consumers. This factor should be assessed by looking at the proportion of the preview in relation to the whole work,
not the aggregate amount of music heard through previews. Streaming a preview of several seconds is a modest amount when compared to the whole work.
Under the remaining factors, there are no alternatives to the dealing that as effectively demonstrate to a consumer what a musical work sounds like. Previews are therefore reasonably necessary to help consumers research what to purchase. Unless a potential customer can locate and identify the work he or she wants to buy, the work will not be disseminated. Short, low-quality previews do not compete with, or adversely affect, the downloading of the works themselves. Instead, their effect is to increase the sale and dissemination of copyrighted musical works.
The previews therefore constitute fair dealing under the Copyright Act.

4.    Case: 33888
Court Summary:
Intellectual property — Copyright — Fair dealing — Copyright Board approving tariff that included as remunerable use the photocopying of excerpts primarily from textbooks for use in classroom instruction for students in kindergarten to grade 12 — Whether such copying constitutes fair dealing — Whether the Federal Court of Appeal erred in upholding the Board’s finding that it is the copier’s purpose, and not the user’s purpose, that is the relevant consideration for fair dealing — Whether the Federal Court of Appeal erred in upholding the Board’s decision to look at copying in aggregate, and not individually, in determining fairness — Whether the Federal Court of Appeal erred by not applying the “not restrictive” interpretation that fair dealing warrants under the decision of this Court in CCH v. Law Society of Upper Canada, [2004] 1 S.C.R. 339 — Whether the Federal Court of Appeal erred in applying the standard of reasonableness, and not correctness, in its judicial review — Is there an inconsistency between the Federal Court of Appeal decision in the present case and in Society of Composers, Authors and Music Publishers of Canada v. Bell Canada, 2010 FCA 123, [2010] F.C.J. No. 570 — Sections 29, 29.1 and 29.4 of the Copyright Act, R.S.C. 1985, c. C 42 (the “Act”).

At the respondent’s request, the Copyright Board of Canada certified a tariff that applied to the reproduction of literary, dramatic and artistic works included in books, newspapers and magazines for use in primary and secondary level educational institutions in Canada, outside Quebec. The Board determined that royalties were payable with respect to some of the photocopies made in schools because they did not constitute fair dealing or come under the exception under s. 29.4 of the Act. The applicants applied for judicial review of the Board’s decision. The main issues became whether: i) “multiple copies made for the use of the person making the copies and single or multiple copies made for third parties without their request for the purpose of private study and/or research and/or criticism and/or review” (“category 4 copies”) constituted fair dealing under sections 29 and 29.1 of the Act; and ii) whether the copying was exempt under s. 29.4 of the Act as a “work or other subject matter as required for a test or examination” where the work is not “commercially available in a medium that is appropriate for the purpose”.

The Federal Court of Appeal upheld the Board’s ruling that the category 4 copies were unfair dealing. This was a question of fact for which there had been no reviewable error. However, the appellate court allowed the application for judicial review on the basis that the Board had failed to address an important part of the test under s. 29.4 of the Act.

HPK note:
In 2004, the Court ruled in the CCH v. LSUC case that “fair dealing” must be given a “large and liberal interpretation” and “research is not limited to non-commercial or private contexts.”   The battle in the K-12 case was essentially between those who are attempting to attack that decision and those who want the court to continue in the same direction as CCH and to put Canadians on a level copyright playing field with the USA in terms of education and innovation. Canadian and American fair dealing and fair use law have evolved as “kissing cousins” according to common law principles, and that’s the approach my intervener client was seeking.

5/4 victory for educators:

The Court’s Headnote:

The Copyright Board’s approach drives an artificial wedge into these unified purposes of instruction and research/private study by drawing a distinction between copies made by the teacher at the request of a student and copies made by the teacher without a prior request from a student. The word “private” in “private study” should not be understood as requiring users to view copyrighted works in isolation.

The Copyright Board’s approach to the “amount of the dealing” factor was also flawed. Having found that teachers only copied short excerpts of each textbook, the Board was required to determine whether the proportion of each of the short excerpts in relation to the whole work was fair. This factor is not a quantitative assessment based on aggregate use, but an examination of the proportion between the excerpted copy and the entire work.

With respect to the “alternatives to the dealing” factor, contrary to the Copyright Board’s conclusion, buying books for every student is not a realistic alternative to teachers copying short excerpts to supplement student textbooks. Purchasing a greater number of original textbooks to distribute to students is unreasonable in light of the Board’s finding that teachers only photocopy short excerpts to complement existing textbooks.
As for the “effect of the dealing on the work” factor, there was no evidence of a link between photocopying short excerpts and a decline in textbook
sales. There were several factors, in fact, other than photocopying, that were more likely to have contributed to any such decline. Moreover, the Board’s finding that the teachers’ copying was limited to short excerpts of complementary texts, makes it difficult to see how the teachers’ copying competes with the market for textbooks.
The Copyright Board’s decision as to whether the photocopies amount to fair dealing is to be reviewed on a reasonableness standard. Because its finding of unfairness was based on a misapplication of the CCH factors, its outcome was unreasonable.


5.    Case: 34210
Court Summary:

Intellectual property – Copyright – Legislation – Interpretation – Whether recording artists and record companies, as performers and makers of music, are entitled to equitable remuneration under s. 19 of the Copyright Act, R.S.C. 1985, c. C-42, when their music is played in movies and on television – Whether the definition of “sound recording” in s. 2 of the Copyright Act precludes equitable remuneration under s. 19 for pre-recorded music forming part of a soundtrack.

Re:Sound is a collective society authorized by the Copyright Board of Canada to collect equitable remuneration for the performance in public or communication to the public by telecommunication of published sound recordings of musical works. Its predecessor filed two proposed tariffs for public performance of published sound recordings, and that relate to the use of such sound recordings in movies shown in movie theatres and to the use of the sound recordings in television broadcasts. The respondents objected to the proposed tariffs on the ground that the definition of “sound recording” in the Copyright Act excludes soundtracks from movies and television shows and sought a determination of the following preliminary issue:

Is anyone entitled to equitable remuneration pursuant to section 19 of the Copyright Act, R.C.S. 1985, c. C-42, when a published sound recording is part of the soundtrack that accompanies a motion picture that is performed in public or a television program that is communicated to the public by telecommunication?

The Board answered in the negative and refused to certify the tariffs. The Federal Court of Appeal, on judicial review, upheld the decision.

Unanimous - per headnote:

  Irrespective of the standard of review, the Board was correct that “soundtrack” includes pre‑existing sound recordings and that such recordings are excluded from the definition of “sound recording” when they accompany a cinematographic work.  This interpretation of “soundtrack” is consistent with the scheme of the Act, Parliament’s intention, and Canada’s international obligations.  A pre‑existing sound recording that is part of a soundtrack cannot be the subject of a tariff under s. 19 of the Act when the soundtrack accompanies a cinematographic work.

                    The provisions in question must be read in their entire context, in their grammatical and ordinary sense, and harmoniously with the scheme and object of the Act, and consistently with the words chosen by Parliament.  According to s. 2 of the Act, a “sound recording” is a recording consisting of sounds “but excludes any soundtrack of a cinematographic work where it accompanies the cinematographic work.”  Therefore, a “soundtrack” is a “sound recording” except when it accompanies the motion picture.  Otherwise, the exclusion would be superfluous.  For a pre‑existing sound recording to be excluded from the interpretation of “soundtrack”, Parliament would have had to make that intention explicit in the Act.  This could have been achieved by excluding, for example, only “the aggregate of sounds in a soundtrack”.  Legislative history confirms this interpretation, notably comments made at the Standing Committee on Canadian Heritage hearing with respect to the provisions at issue.

                    The Copyright Act is not incompatible with the Rome Convention. Although the Rome Convention states that producers of phonograms shall enjoy the right to authorize or prohibit the direct or indirect reproduction of their phonograms, Article 3 defines “phonogram” as “any exclusively aural fixation of sounds of a performance or of other sounds”.  A soundtrack that accompanies a cinematographic work is not for “exclusively aural fixations”.  Furthermore, if a pre‑existing sound recording is extracted from a soundtrack accompanying a cinematographic work, it once again attracts the protection offered to sound recordings.  The Board’s interpretation is consonant with Canada’s obligations under the Rome Convention.



  1. In reading the K-12 decision, a key aspect of the judgement is based on the copies in question being "short excerpts." So what portion of the larger works were being copied in this case? Is the SCC considering copies of one or two pages, or were there sections of 5%, 10%, 15% of the whole text being considered in this case? In other words what portion of a work is it that the SCC is considering as a "short excerpt"? That makes a big difference in how this ruling can be applied to copying practices in K-12 and universities.

  2. Neither the majority nor the minority dealt with the size of the excerpts, and perhaps the parties had all agreed they were substantial reproductions just to get into the fair dealing analysis. There was discussion in the decision about the difference between proportionality of the excerpt to the entire work versus the aggregate copying position taken by the losing side. If an excerpt is very short, then it's not substantial reproduction and FD isn't triggered.

    What I had trouble getting my head around was that the first FD issue was agreed (i.e. a valid FD purpose) by the parties, yet the Board and the FCA then found it's non-private study in the 1st of the 6-part FD analysis. Abella (and the majority) properly dealt with this apparent FD inconsistency, but it was odd at the two levels below, since both parts of the FD test are purpose driven. How can it be a valid purpose in Step 1, yet not be a valid purpose in Step 2(a)?

    BTW, great post on the decision Howard!