There is No New “Making Available” Right: The Copyright Board Got It Wrong

 

On July 15, 2022 the Supreme Court of Canada (“SCC”) rendered a lengthy, nuanced and very important judgment  in Society of Composers, Authors and Music Publishers of Canada v. Entertainment Software Association, 2022 SCC 30 (CanLII), <https://canlii.ca/t/jqgw0>.

Objectively, the decision affirmed that:

1)     There is no new “making available right" as such resulting from the 2012 amendments to the Copyright Act. The new definition added as s. 2.4(1.1) merely clarified the meaning of the existing right under s. 3(1)(f) to “communicate to the public by telecommunication”, and did not create a standalone new right or a justification for stacking on an additional tariff.

2)     SOCAN was not entitled to stack a new royalty on top of existing tariffs simply by virtue of a user making a work available for streaming or download. Such activity is already covered by existing rights and tariffs, and the 2012 amendment clarifying the definition of “communication of a work or other subject matter” in s. 2.4(1.1) doesn’t create new liability.

3)     The “definition” provisions in s. 2 of the Copyright Act do not add new rights. The rights of owners of “works” are found in the first paragraph of s. 3(1). As ably stated by ESA, “These rights are the right to reproduce, perform, and publish the work or any substantial part thereof.” The “making available” provision, however, is not contained in this rights-granting section but rather in definition section 2.4(1.1).

4)     The Court once again affirmed the importance and centrality of the doctrine of technological neutrality to applying the Copyright Act.

5)     The Court once again affirmed the principle of balance in copyright law:

   “[5] I cannot agree with the Board’s interpretation of s. 2.4(1.1). The Copyright Act does not exist solely for the benefit of authors. Its overarching purpose is to balance authors’ and users’ rights by securing just rewards for authors while facilitating public access to works. When this balance is achieved, society is enriched. Authors are encouraged to produce more works, and users gain access to works which they can use to inspire their own original artistic and intellectual creations.”

6)     The Court once again affirmed the rule that one activity (here, streaming or downloading) can only give rise to one royalty payment, and that payment of two royalties for the same activity is prohibited.

7)     The domestic legislation is what is determinative – not the treaty. Without being as blunt and even apparently sarcastic as Justice Statas was in the Federal Court of Appeal when he  he referred to “the vibe” of international law, the SCC affirmed Justice Statas’ general approach to use of international law to interpret domestic statutes.  

8)     The Copyright Board was wrong – i.e. not “correct” - in its interpretation of the 2012 legislation. The Copyright Board will be held to the “correctness” standard of review when it comes to interpreting the Copyright Act because it shares concurrent first instance jurisdiction with the Superior Courts. The Board will be given no deference for being “reasonable” in its interpretation of the substantive provisions of Copyright Act. It must be correct. Importantly, this is the first new category of correctness review since the landmark Vavilov decision. Two of the judges disagreed and would have applied the more deferential “reasonableness” standard. That said, they found that the Board’s decision was unreasonable in this case.

9) Justice Rowe states and reiterates that “If a work is made available for downloading, the author’s right to authorize reproductions is engaged.” (paras. 8, 108). Moreover, the meaning of “authorize” has been considered in greater depth in a number of prior SCC decisions. It will be interesting to see whether future courts look more to ESA or to earlier cases like CCH when confronted with this issue.

10) Finally, this decision may or may not have some potential application to infringement cases, given the closing comment from Justice Rowe:

 [113]  Before concluding, I would note that the value of these rights is not in issue in this appeal. Setting the appropriate royalties to compensate authors when these rights are engaged is a matter for the Board to decide. Similarly, the considerations that a court might have regard to in assessing monetary remedies for infringement is a matter to be decided if and when such a case arises. 

More subjectively:

 1)     To put it bluntly, when the Copyright Board strays out of its permitted and mandated narrow lane of rate-setting (see Prof. Katz’s factum on this point)  and presumes to interpret the substantive provisions of the Copyright Act – much less international law – it had better be “correct” and just not merely “reasonable”. While the SCC recognizes that there can be many “reasonable” outcomes, there is normally only one “correct” outcome.  This clarifies a residual issue from Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 (CanLII), [2019] 4 SCR 653, <https://canlii.ca/t/j46kb> concerning the standard of review for the Copyright Board. This is bound to upset the Copyright Board, following less than a year after the SCC declared that Copyright Board tariffs are not mandatory for unwilling users in the York v. Access Copyright decision, which I wrote about here. Per Abella, J:

 [39]     As matter of legislative coherence, it would be incongruous if royalties fixed in the context of licence negotiations between a collective society and a specific user were voluntary, but those set in a general tariff were mandatory. https://www.canlii.org/en/ca/scc/doc/2021/2021scc32/2021scc32.html

2)     This clearly very expensive and lengthy detour could have been avoided if the Board had not called for extensive submissions on the implications of the WIPO treaties – which numerous well-resourced parties went along with resulting in a pantheon of experts’ opinions. All of this could and should have been avoided if the Board had simply allowed or denied SOCAN’s submissions on the basis of the Canadian Copyright Act, the 1996 WIPO treaties, and existing authorities on the subject. Then, the FCA could have resolved the issue on judicial review. Canada does not need a panoply of “experts” to read a domestic statute, and if appropriate, an international treaty and published commentary on it. We don’t need a monumentally expensive, dilatory and gratuitous display of the “the vibe” of international and treaty law in what should have been a rate setting exercise. The Board’s decision to proceed the way it did could potentially have set a dreadful precedent in terms of access to justice in situations wherein objectors do not have the resources that were available in this instance.

3)     Ironically, after recognizing that a freestanding “making available right” existed, the Board nonetheless refused to value the making-available tariff because ‘the evidence before it was inadequate to warrant the setting of a tariff for ‘making available’’. This was upheld as “reasonable” in the companion decision of the FCA. CMRRA-SODRAC Inc. v. Apple Canada Inc., 2020 FCA 101 (CanLII), <https://canlii.ca/t/j82gf>. Arguably, that should have been the end of the matter for the Board, especially since the Board recognized more than a decade earlier in another proceeding for a SOCAN tariff on “other sites”  that “in the absence of proper and reliable evidence, it would be irresponsible to certify a tariff that could potentially have such a broad scope of application” and this was upheld by the FCA, in a decision in which I played a leading advocacy role.
Society of Composers, Authors and Music Publishers of Canada v. Bell Canada, 2010 FCA 139 (CanLII), <https://canlii.ca/t/29z9n>, which Justice Stratas cited in 202 FCA 101.

4)     Interestingly, the issues of royalty stacking and the effort to twist or elevate definitions into new rights has a long history:

a)     The monumental Report of Judge Parker from 1935 outlined the concerns with the attempts by the predecessors of SOCAN to impose “additional” costs on motion picture exhibitors as a result of the new technology of the day – namely “talking pictures” and such practices as the notorious attempt imposition of a “score charge” to “to recoup for the producer his cost, and perhaps a profit, on what was involved in putting the sound track on the film or record the sound on a disc, timed in relation to the film." This was a blatant and early attempt at royalty stacking – and it prompted the establishment of the Copyright Appeal Board in Canada, which worked very well in Canada until the Copyright Board came along more than five decades later.

b)     Kraft tried to twist the s. 2.7 definition of an “exclusive licence” added in 1997 to the Copyright Act into a right to “thwart” the importation of perfectly authentic Toblerone chocolate bars based on copyright in a small picture on the packaging. I successfully thwarted this argument on behalf the Retail Council of Canada as an intervener when this case went to the SCC resulting in the decision in Kraft Canada Inc. v. Euro Excellence Inc., 2004 FC 652 (CanLII), [2004] 4 FCR 410, <https://canlii.ca/t/1h3qj>

c)     In one of the 2012 “Pentalogy” cases at the SCC, the Motion Picture Association of Canada incongruously argued, in effect, that the word “excludes” in the definition of “sound recording” actually means “includes”. The definition in question was: “sound recording” means a recording, fixed in any material form, consisting of sounds, whether or not of a performance of a work, but excludes any soundtrack of a cinematographic work where it accompanies the cinematographic work”. (underline added). Needless to say, the SCC wasn’t impressed and the only mystery was why it even heard the case in the first place. See Re:Sound v. Motion Picture Theatre Associations of Canada, 2012 SCC 38 (CanLII), [2012] 2 SCR 376, <https://canlii.ca/t/fs0vc>

BTW, I was not alone in finding the hearing to be rather confusing. Even the judges were wondering at times about who was agreeing or disagreeing with whom and about what. Here’s the webcast.

Some of the parties seemed to depart from their factums – which in some cases were much more clear than their oral arguments. Perhaps the most useful factum was that of ESA, which can be found here.

 HPK

Standard of Review: The Beginning of the End or the End of the Beginning?

(Wikimedia)

The deadline for applications for leave to intervene the Supreme Court appeals involving Bell Canada and the “simultaneous substitution” or “simulcast” issue is August 31, 2018 by my calculation.

It very much looks like the real issue is not so much about the Superbowl and simultaneous substitution but what the SCC wants to do about the “sempiternal” issue of “standard of review” and the landmark Dunsmuir case that was supposed to be the beginning of the end of uncertainty but has instead become something more like the end of the beginning about uncertainty.

In granting leave to appeal, the Court made the very unusual statement that:

The Court is of the view that these appeals provide an opportunity to consider the nature and scope of judicial review of administrative action, as addressed in Dunsmuir v. New Brunswick, [2008] 1 S.C.R. 190, 2008 SCC 9, and subsequent cases. To that end, the appellants and respondent are invited to devote a substantial part of their written and oral submissions on the appeal to the question of standard of review, and shall be allowed to file and serve a factum on appeal of at most 45 pages. 

The Court has also taken the unusual step of appointing amicus curiae  to assist on these case and a related case.

A crucial aspect of this discussion is the presumption of “expertise” by administrative tribunals. In a recent posting by the Copyright Board of remarks by its Chair Justice Robert Blair at an event on May 1, 2018, the learned Chair effectively admitted that the Board may lack expertise in certain respects and that the Board’s expertise may depend upon who is chosen to be a member or even the Chair:

I think it is also important to keep in mind that, while the Board’s staff, and at least the current Vice-Chair, are the repositories of a great deal of expertise in the rate-setting process, all members of the tribunal at the hearing may not have that same in-depth knowledge. The Chair must be a sitting or retired superior court judge (where very little intellectual property work, much less copyright work, is done), and to date has not come from the Federal Court system where they actually know something about those subjects! In addition, none of the present members is an economist. In this sense, the old adage that applies to every good counsel, in any setting, is relevant: know your adjudicator and your forum.

Copyright lawyers will know that the Supreme Court has carved out a special niche for the Copyright Board, essentially holding it to the stricter “correctness” standard because the same questions of law concurring the Copyright Act can arise both before the Board and in the courts. See
Rogers Communications Inc. v. Society of Composers, Authors and Music Publishers of Canada, [2012] 2 SCR 283, 2012 SCC 35 (CanLII), <http://canlii.ca/t/fs0v9>

One can only hope that this niche is preserved. Copyright law is sometimes very arcane and Copyright Board rulings can be very important in many ways. It is perfectly reasonable, if I can put it that way, that the Copyright Board be held to the standard of correctness on questions of law.

Interveners, start your engines.

HPK

Chief Justice McLachlin on Administrative Tribunals and the Courts: An Evolutionary Relationship

I should have noted this earlier, but here's an important speech by the Right Honourable Beverley McLachlin, P.C., Chief Justice of Canada, dated May 27, 2013 concerning Administrative Tribunals and the Courts: An Evolutionary Relationship.

This is a "must read" in terms of the role of administrative tribunals generally, the role of the courts in reviewing their decisions, and the evolving issue of standard of review.

There's a useful quote by her of a statement by Justice Abella when she was sitting on the Ontario Court of Appeal:

Designed to be less cumbersome, less expensive, less formal and less delayed, these impartial decision-making bodies were to resolve disputes in their area of specialization more expeditiously and more accessibly, but no less effectively or credibly.

HPK

 

 

Fair Dealing, Standard of Review and Possible Interventions at the Supreme Court of Canada

The Supreme Court of Canada’s hearing process involving the SOCAN “Previews” case is well underway. SOCAN has just filed its factum (redacted version attached). Although the fact situation arises from the fairly specific circumstance of the use of 30 second previews of songs on iTunes, the overall issues that will inevitably be argued  go straight to the heart of what is “fair dealing” and what “research” means. If the Court finds in favour of SOCAN and its reasons are framed more generally than necessary, the decision could have far reaching negative consequences for those who believe that fair dealing is important.

Unfortunately, we do no not know at this time if the Court will grant leave in CMEC’s (Province of Alberta et al)  K-12 case, which involved the apparently far more general issue of whether material prescribed by a teacher or provided in multiple copies can be fair dealing. The CMEC Leave to Appeal application is attached. This is the other side of the coin to the previews case. In the former, the Federal Court of Appeal looked at the “purpose” of the user. In the latter, the Federal Court of Appeal refused to do so. The decisions are only a few weeks apart but emanate from different panels of the Federal Court of Appeal. The results are frankly not apparently reconcilable. Normally, we would know by now if the CMEC case would be heard. It is a mystery as to why the Court has not yet ruled on this.

What we do know is that the Court has decided to hear two other cases arising from SOCAN’s never ending Tariff 22 “music on the internet” case. These cases focus on whether there was, in the circumstances involved, a “communication to the public”. They do not involve fair dealing. Apart from the fact that these cases all stem from SOCAN’s Tariff 22 tariff, all involve the internet, and all come from the Copyright Board, there is nothing else obviously in common - except perhaps for the very troublesome but important  question of “standard of review” generally and with respect to decisions from the Copyright Board in particular.

It is interesting that SOCAN’s Tariff 22, which began its life in 1995,  has already been to the Supreme Court of Canada once, and was ruled on in 2004. Although Tariff 22A for online music services is now generating over $11 million a year, the rest of the tariff is a work in progress and appears to be far more beneficial to the numerous lawyers involved than to composers and authors.

All of these three cases will be heard together - likely in one day  - with the possibility of compressed time allotments for each case. In normal circumstances, the parties would get one hour each and interveners 10 minutes each. The other two communications cases are on a different timeline than the “previews” case - but everything will converge on December 6, 2011.

I was - but no longer am - confident that the SCC will necessarily grant leave in the CMEC case. The unusual delay in rendering judgment on the leave application and the fact that two less obviously related cases that have nothing to do with fair dealing have been linked to the “previews” case gives one cause for doubt. But hope springs eternal. Ideally, CMEC will get leave for its case and there will be a standalone hearing. (I should disclose that I was involved in this case in the Federal Court of Appeal for the intervener CAUT). 

Accordingly, any party interested in either issue  of “fair dealing”/ “research” or  the common element of standard of review may wish to seek leave to intervene in the previews case and to join the fray on December 6, 2011, when these cases are scheduled to be heard.

Potential interveners may wish to combine their efforts. This may not only save costs but enhance the chances of being heard under these somewhat unusual circumstances in which time allotments will be scarce and likely very limited.

Applications for leave in intervene must be filed on or before May 16, 2011.

Potential interveners may include those interested in issues involving:

•    education
•    libraries
•    archives
•    museums
•    publishing
•    freedom of expression
•    academic freedom
•    marketing and sales
•    retailing
•    operators of websites that provide previews, thumbnails or other limited versions of protected works
•    research of any kind, commercial or otherwise
•    administrative law generally, and standard of review at the Copyright Board in particular

HK

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.

Speeches by Chairman of Copyright Board Now Posted

The Copyright Board has recently posted on its useful website three 2008 speeches by its Chairman, Justice William Vancise. These are as follows:

Ottawa, January 18, 2008 The Law Society of Upper Canada,12th Annual Intellectual Property Law Year in Review in which Justice Vancise:
• comments on several decisions of the Federal Court of Appeal and the Supreme Court of Canada dealing with “standard of review”. Note that this paper was given a few weeks before the important decision of the Supreme Court of Canada in Dunsmuir v. New Brunswick 2008 SCC 9, which is noted in a footnote.
• comments on the Federal Court of Appeal’s decision in CAB v. SOCAN 2006 FCA 337 involving the radio tariffs wherein the Board was criticized for the inadequacy of its reasons.
• comments on challenging by way of judicial review positions conceded by counsel before the Board. (This is clearly a reference the Ringtones case, wherein the objectors conceded “that downloading a ringtone is a communication by telecommunication”)

New York, March 28, 2008 Fordham Intellectual Property Law Institute Annual Conference in which Justice Vancise:
• considers the potential impact of the SCC’s Dunsmuir decision.
• comments further on the issue of adequacy of reasons and in particular on the Federal Court of Appeal’s reasoning in CAB v. SOCAN 2006 FCA 337 and Apple, Retail Council, et al v. CCPC 2008 FCA 9 heard on January 9, 2008 with reasons delivered the next day that quashed the Board’s decision to proceed with a hearing for a tariff on digital audio recorders.

Cambridge, Ontario, June 20, 2008 Broadcasting Invitational Summit in which Justice Vancise:
• comments on broadcasters’ concerns about “excessive multiple tariffs” and compares the Board with the CRTC.

These speeches by Justice Vancise are unusually frank and, frankly, unusual with respect to comments on certain decisions of the Federal Court of Appeal and the Supreme Court of Canada, which are the Courts that review the Copyright Board’s decisions. Accordingly, these papers are not only very interesting and important reading but are a “must” for all who need to know about the work of the Copyright Board and how its decisions are reviewed.

HK