More Decisions from Judicial Review of Copyright Board Decisions

The Federal Court of Appeal (“FCA”) rendered two (or was it three? - see below) further decisions dated September 2, 2010 flowing from the now 14 or so year long proceedings involving SOCAN’s Tariff 22.

In the judicial review application brought by the major ISPs, the Court held that the delivery of files or streams of music from point to point one at a time on request via the internet is a “communication to the public” if there is an intention to communicate to the public. There can be communication even if it is only to a single user.

This is consistent with a decision from two years ago in the ringtones matter, though the arguments and facts were somewhat different. The ringtones case was hampered by the fact that the objectors had decided, for whatever reason, to concede before the Copyright Board that there was a “communication” involved. The Federal Court of Appeal heard argument on the issue notwithstanding the reversal of the objectors’ position - but upheld the Copyright Board. This recent challenge was an uphill battle to be sure, especially given the previous history of this issue.

This confirms that Canada, once again, provides stronger copyright protection than the USA in a way that costs Canadians money and for no obvious policy advantage. This takes the form of potential double payments or more for the same transaction (i.e. performance rights + communication rights + reproduction rights) in contrast to the USA, where the Courts have rejected such arguments in similar circumstances, but with different legislation. By far, the lion’s share - probably over 90% of the value of this extra protection - leaves Canada and goes to the USA.

This decision could also have an impact on file sharing. There is some obiter dicta at para. 59 that suggests that peer to peer file sharing is an activity where “there is clearly an intention to communicate to the public.”

Ironically, if this is the case, then Canada arguably does not need a “making available” right as such, at least in the case of musical works. However, it still may be open to argument on the part of an individual engaging in downloading in the P2P context that he/she had no intention to share by uploading and may be quite ignorant of the way in which particular software or protocols (e.g. Bittorent) work in this respect.

Of very great interest to lawyers and the Copyright Board will be the Court’s unusual statement that the Copyright Board is entitled to deference “with respect to its interpretation of the [Copyright] Act” and on “pure questions of law” (paragraph 25). This is the second time in just over a month that the FCA has dealt in a surprising and, with respect, arguably incorrect manner with the “standard of review” issue. See also Alberta v. Access Copyright (the K-12 fair dealing case), in which I acted for the intervener CAUT.

My friend Barry Sookman also finds the ruling on the standard of review to be a "surprising suggestion", though he didn't seem troubled by a similar conclusion in the Alberta v. Access Copyright decision noted above, in which he acted for interveners representing major publishers.

Previous jurisprudence from the FCA and the Supreme Court of Canada has been generally interpreted to mean that the Board must meet the standard of “correctness” on legal issues - not just “reasonableness” - especially where the legal question involving interpretation of the Act could potentially have implications in court proceedings that have nothing to do with the Copyright Board. This would clearly seem to be the case in this instance, since the communication right could arise in civil litigation. The Court in this instance found that the Board’s decision was “reasonable” - but stopped short of finding that it was “correct”. Often, a court will indicate its views on whether a decision meets both standards - for example, in this earlier decision from last May arising out of the same batch of judicial review applications.

Interestingly, the FCA just two years ago in the ringtones decision, which involved very similar issues, applied the correctness standard. Now, just when many thought the “the sempiternal question of the applicable standard of review” was reasonably resolved insofar as the Copyright Board is concerned, and the FCA itself has explicitly discouraged counsel from dwelling on it in oral argument, it now appears that the issue is once again wide open. It is important that this be resolved with respect to the Copyright Board, since so many of its decisions result in applications for judicial review, and many of which in turn have been successful when the “correctness” standard was applied by the Federal Court of Appeal.

Another interesting ruling was made in yet another part of the never ending Tariff 22 saga in the September 2 ruling. This concerned ESA’s argument that SOCAN had failed to provide “adequate evidence” to justify the fairness and reasonableness of the tariff in respect of video games. The Court held that “the collective administration regime depends on the certification of tariffs” and that “‘This system, which seeks to balance the rights of creators and users, cannot be hobbled by an overly rigid approach to the assessment of the basis upon which a tariff is certified.”

This appears to be at odds with a ruling by the same panel in the case on “other sites” which was heard together with the ESA case last May (in which I represented the Retail Council of Canada). In that decision, the Court stated at para. 26 that:

In my view, it would have been unreasonable for the Board to certify this impugned Item of the proposed Tariff 22 in the absence of the necessary probative evidence, on mere guesses, speculations and approximations, especially in view of the long retroactive period covered (1996 to 2006) and the fact that, as the Board found, it is only at the end of that period that social networking and video sharing sites became popular.

In this case, ESA had apparently itself suggested a base rate of .08%. There had been no such suggestion in the “other sites” case - but that may not be enough to resolve the apparent inconsistency in the approach by the Court.

The ESA decision also adopts the same conclusion about standard of review as was utilized in the communication to the public ruling.

Yet another curious aspect of these rulings is that CRIA’s application for judicial review, which was heard along with the others, was dismissed, but no reasons were provided.

It seems that we have just finished a summer of uncertainty in respect of several cases involving judicial review from the Copyright Board. Could there be yet other expeditions in store to the Supreme Court of Canada?

The next move towards the Supreme Court is up to CMEC - and we eagerly await its filing on or before September 29, 2010, unless, for some unexpected reason, it should decide not to seek leave. The K-12 fair dealing ruling from the Board as upheld by the FCA seems to be "fundamentally inconsistent", as I said here, with the SOCAN “previews” ruling from a few weeks earlier - and the two cases would make for a great pair for the SCC to consider. SOCAN has already filed its leave to appeal application arising from the FCA's “previews” ruling.

We’ll know within 60 days whether the September 2, 2010 rulings may also generate one or more leave to appeal applications, although the standard of review question could well be resolved in the fair dealing cases, should the Court decide to take them on. No doubt, there would also be several parties seeking leave to intervene in these cases.

HK

PS - there was some confusion about the date of the decisions. The correct date is September 2, 2010.
They were faxed out that evening and not received by me until September 3, 2010. Accordingly, I've
amended the above.

The Tariff 22 JR Opening Parade

The Tariff 22 Judicial Review ("JR") applications are lining up and the notices are being served. Judicial review is, in effect, an "appeal" from a tribunal decision, in this case from the Copyright Board.

So far, I've seen the JR notices from SOCAN, Shaw and CRIA.

SOCAN doesn't like the fair dealing ruling regarding previews. One hears that there was a lot of pressure on SOCAN from other content owners to try to overturn this. Many copyright owners and most collectives hate the concept of "fair dealing", which the Supreme Court of Canada has affirmed as a user's right that must be given a "large and liberal interpretation." Sadly, "fair dealing" is seen as threatening by the copyright owner/collective establishment and even some users are slow to recognize it. For example, in its widely used publication Copyright Matters!, CMEC seems to be in denial, or at least far too cautious, with respect to its interpretation of the benefits to its constituency of the landmark victory at the Supreme Court in CCH.

CRIA has raised several points that basically go to rate calculation (i.e. how to carve up the "pie", rather than than whether there ought to be a pie here in the first place).

SHAW has raised what is probably the most fundamental point in this instance - which is that:

The Board exceeded its jurisdiction and erred in law in holding that the transmission via the internet of a download of a musical work to an individual consumer is a communication to the public by telecommunication within the meaning of paragraph 3(1)(f) of the Copyright Act.

SHAW goes on to say:

More specifically, the Board exceeded its jurisdiction and erred in law in holding that:
a. the transmission of a download over the internet communicates the content of the download;
b. attempts to distinguish streams from downloads are based on technical and legal assumptions that are incorrect;
c. one or more transmissions of the same work, over the internet, by fax or otherwise, to one or more members of a public each constitute a communication to the public;
d. any file an online music service offers to consumers is communicated to the public as soon as one individual consumer “pulls” the file, by requesting that the file be delivered via the internet to that individual;
e. a communication is to the public even if recipients do not share a simultaneous (or near-simultaneous), common experience;
f. any attempt to compare delivery of music online with delivery of music on physical media is inherently flawed from a copyright perspective;
g. a person who communicates a work to a member of the public with a view to providing that person with a copy of the work commits two separate wrongs;

The issue of whether a "communication" right is entailed in a transmission to an individual is already before the Federal Court of Appeal in the Ring Tones case. I’ve mentioned before that the “communication” issue was conceded in the ring tones hearing, but the remaining objectors changed position on JR. I had originally argued at the Board against the applicability of a “communication” right, but my client decided to withdraw from that hearing.

The question of whether there is a communication right in addition to a performance right in certain circumstances is of the utmost importance in several tariffs.

We can already see the complexities arising from multiple payments to the same and/or different parties for the same transaction. This is the great folly that the Government embarked upon when, back in 1989 or so, it decided to attempt to capture virtually every “communication” and let the Board sort out the resulting redundancies and overkill.

Clearly, if the Federal Court of Appeal strikes down the “communication” theory, there will be lot of cleaning up to do at the Copyright Board. And if it does not, there will be a lot of messy tariffs with multiple payments to multiple parties for the same thing.

More JR notices are expected from the ESA (“Electronic Software Association”) and Bell Canada.

How long this will take to unfold, and what effect all of this will have on the remainder of the Tariff 22 decision yet to come are any body's guess. As I keep saying, the Tariff 22 process is already more than 12 years old. And it's not improving with age.

Instead of, as expected, inflicting unnecessary and now clearly wrong headed and obsolete DMCA legislation upon Canadians, and opening the floodgates to suing music fans and families, why doesn't the Government start to clean up the copyright environment with respect to this labyrinth of proliferating and redundant tariffs and collectives? It's a great situation for lawyers and consultants, but does very little, if anything, for most individual creators and is very costly to users who must spend enormous sums to stop the situation from getting even worse.

HK