Tuesday, December 22, 2015

Netflix, Technological Neutrality, Fair Dealing, Procedural Fairness and the Copyright Board of Canada

Back on September 24, 2014, I posted about how Netflix was seeking judicial review (i.e. an “appeal” in laypersons’ terminology) of a Copyright Board Tariff decision. Part of what I said then was this:

The whole technological landscape changed when Netflix launched streaming internet based video into Canada in September, 2010. Netflix was technically only an intervenor in the Board case. It is upset that the Board imposed a tariff on the one-month “free” trial membership that Netflix offers. 

Here is how Netflix is affected by the Board’s tariff:

“For a service that offers subscriptions to end-users: 1.7 per cent for the years 2007-2010 and 1.9 per cent for the years 2011-2013 of the amounts paid by subscribers. In the case of free trials, a minimum monthly fee of 6.8¢ for the years 2007- 2010 and 7.5¢ for the years 2011-2013 per free trial subscriber shall apply;”

Fair dealing for Netflix is clearly an issue. $0.068 per customer per month for free trials adds up over the years with as many millions of customers as Netflix has. Also unresolved and up in the air are issues around “downloads” and “making available right” – on the one hand, the Board says that SOCAN not entitled  but then the tariff refers to liability for downloads.

The Federal Court of Appeal (“FCA”) per Nadon, J.A. has now ruled. There is a complex history to this case going back almost a decade to 2006, which is recited in the judgment and should be read by all Copyright Board watchers. It is also noteworthy that this judicial review application was argued on October 5, 2015. The Supreme Court of Canada’s ruling in CBC v. SODRAC was rendered on November 26, 2015. This Netflix decision was rendered December 17, 2015.

Here, in the interests of immediate information with minimal comment, is the succinct bottom line of the FCA:

[52]           Before concluding, I would simply say that, in the end, rules of procedure are there to serve the interests of justice. In my view, justice in this case required that Netflix be given the opportunity of putting its case forward with regard to the issues of fair dealing and technological neutrality.

VI.             Conclusion

[53]           I would therefore allow the application for judicial review with costs, I would set aside the Board’s decision insofar as it pertains to royalties on free trials and I would return the matter to a differently constituted panel of the Board for redetermination in accordance with these reasons.

            (highlight added)

Some interesting questions naturally arise immediately: 
  •  What effect might the CBC v. SODRAC decision have had on this case, if the ruling had been available at the time of argument?
  •  What effect will it have if this case goes back to the Board for redetermination?
  •  What effect will it have, if SOCAN should seek leave to appeal from this decision to the Supreme Court of Canada?
  •  Given that two of the three members of the Copyright Board who decided the original decision in 2013 are still on the Board, and only one new member (the Chair, Justice Robert Blair) has since been appointed and there are no other currently appointed members, how will the unusual but clearly intentional reference to “a differently constituted panel” play out? Will Section 22 of the Interpretation Act concerning "quorum" need to be considered?

Other comments will doubtless follow from me and others.