Unanimous approval for Supreme Court determination to review Tariff 22

Music and Internet industry players are applauding a March 27 announcement that the Supreme Court of Canada will hear an appeal and cross-appeal of a lower court’s controversial ruling on Tariff 22, proposed royalties for music distributed electronically (CNM, Oct. 30/02). Canada’s highest court agreed to hear an appeal by a coalition of Internet service providers (ISPs) of the Federal Court of Appeal’s May 2, 2002 decision that ISPs must pay royalties related to music cached on their servers and that music downloaded here from outside the country is subject to royalty payments. In turn, the highest court will also hear a cross-appeal by the Society of Composers, Authors and Music Publishers of Canada (SOCAN) arguing that the lower court erred in determining that ISPs act only as conduits of music. The court has allowed both parties to proceed with their arguments, a process that will likely take at least a year. The ISP coalition, which includes the Canadian Association of Internet Providers (CAIP), the Canadian Cable Television Association (CCTA), and Bell Canada, has until April 28 to file its Notice of Appeal, and until July 21 to file written materials on its appeal. SOCAN has until September 15 to file its written materials on the ISPs’ appeal and its own cross-appeal. The ISPs have until September 29 to file their reply to SOCAN’s cross appeal. CAIP president Jay Thomson, whose members would be the most greatly affected by any final decision to apply tariffs to caching activities, says he’s encouraged the issue will move on to the Supreme Court. "We’re obviously very pleased that the federal court of appeal (potentially) made a reviewable error and we look forward to convincing the court that Canada should follow the route of other countries around the world on this issue," he says. CCTA senior counsel Jay Kerr-Wilson tells Canadian NEW MEDIA: "Obviously, we’re very pleased and think that the court’s decision, not only to grant our application but SOCAN’s application for cross-appeal, shows the importance of the issues at stake. I think it’s going to be a fundamental case in the development of Internet law in this country." Across the table, SOCAN counsel Paul Spurgeon agrees. "We’re pleased that they are going to hear the cross-appeal," he says. "Obviously, there are issues of national importance…to copyright owners and we’re looking forward to being able to put our position forward…We just want to ensure that we have adequate remedies that we can protect the rights of copyright owners." The unanimous approval of the court’s stand is to be expected. The Supreme Court has dealt very little so far with new Internet technologies, with the exception of the recent Earth Fund Lottery case, which was thrown out in a matter of minutes (CNM, March 21/03). Observer Sunny Handa, counsel with Blake, Cassels & Graydon and formerly lawyer to JumpTV.com Canada Inc., says digital copyright issues need to be dealt with soon. "I think the court’s making a concerted effort to clear up copyright law because it’s becoming a more and more important part of the law. It hasn’t been adequately dealt with by the court for years. The U.S. courts started this about 10 years ago…Lower courts are increasingly treating copyright matters because they have to. They’re coming up more and more and now they’re starting to percolate up to various courts of appeal in the country. I think you’re going to see more cases go to the Supreme Court where they will agree to hear it," Handa tells CNM. "Our law has not kept up with the digital world, which may not be such a bad thing. You don’t want to get it wrong. The U.S. is much bolder than we are in that respect and many would say that they did get it wrong. We’ve been studying the balance from a legislative perspective, but the fact of the matter is that from a business perspective, business goes on. Business goes on even if there are some grey areas. That’s why there’s now pressure on the courts to fix some of those grey areas, to give us a little more direction because the legislature is just waiting around and trying to decide what to do with digital rights." In that vein, industry observers are pondering the potential effect a pending court case on ISP liability might have on the current section 92 review of the Copyright Act that might be underway in a matter of weeks (CNM, Oct. 16/02). The House of Commons Standing Committee on Canadian Heritage is in the process of finalizing a report on its study on the Canadian broadcasting system, but a committee source tells CNM that a call for submissions on digital copyright issues is now being considered. A Canadian Heritage official says that review will continue despite the Tariff 22 case now before the Supreme Court. ISP liability would be on the table in the first round of new copyright reforms, but observers are divided on whether the court case will affect the reform process. "At the end of the day, if the law changes, the Supreme Court and every other court is bound by it unless you have a constitutional problem," Handa says. "At the end of the day, if the court comes out with a decision that says one thing and Heritage changes the law, then the court’s decision may not stand as being a correct decision under the new law. In that sense, Heritage is not bound by what the court says. However, that said, once the court comes out with a decision, if business starts to build up, then Heritage has a big mountain to climb up politically to sort of pull the rug out from under businesses who have already started to do things in a certain way. The longer you wait, the more difficult it becomes to pass a law that changes things fundamentally." Kerr-Wilson says the case, despite its importance, is still very narrow. "You have to remember that this case, even though it’s going to have broad implications, is still about a Copyright Board decision on a SOCAN tariff. The section 92 amendments are going to be about ISP liability in general, applying to the whole gamut of works and related subject material. The government has never expressed to us that they think that the two issues are so linked that they’re going to remove ISP liability from the first round of updates. I think that the government understands that resolving ISP liability is still a key issue and I think they can do that without necessarily stepping on the Supreme Court’s toes." Thomson is encouraging the government to move forward. "The government has launched its digital copyright review process a little while ago," he says. "One of the key issues, certainly for us, has been the matter of ISP liability and…it is on the table. I think it would be good from our perspective if the government clarified that ISPs shouldn’t be liable in these circumstances so that we don’t have to face these kinds of court cases…I would suggest that the government always has the role to move forward on policy issues that are important. It can, and I think it has in the past, made decisions and moved forward on policy and regulation notwithstanding that the courts may be considering something."

Unanimous approval for Supreme Court determination to review Tariff 22

News | 04/03/2003 5:00 am EST

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