Expected constitutional challenge to private copying decision takes first step

The Copyright Board of Canada’s December decision on private copying is under attack from nearly all quarters as several parties to it have put the issue to the Federal Court of Appeal. In separate applications, the Canadian Private Copying Collective (CPCC), the Retail Council of Canada (RCC) and a coalition of digital device manufacturers have asked for a judicial review of the decision, which should come sometime this year. The applications argue the board committed a range of errors in coming to its decision to begin applying the levy to a new class of memory used in music playback and recording devices, as well as a familiar argument that the entire scheme is unconstitutional. Last year on December 12, the Copyright Board issued its long-awaited ruling on tariffs to be applied to blank media, including on CD-Rs and on the memory in a new class of devices used to play MP3 music files (CNM, Dec. 19/03). The levies are intended to compensate music rightsholders for the private copying of music tracks, but the fees have proven to be a multi-million dollar boon to the recording industry. Opposition to their imposition has been fierce for several years as lawyers argue that they are an improperly authorized tax, and that their application has proven arbitrary. It has surprised no one that the Ottawa-based law firm Macera Jarzyna, working on behalf of Canadian retailers, has challenged the board’s December ruling on constitutional grounds. In its application for higher court review, the RCC writes: "the is in fact and in law a tax that has not been validly enacted in accordace with the requirements of s. 53 of the Constitution Act, 1867 and the Standing orders of the House of Commons or, alternatively, has not been validly delegated." The RCC also argues that the private copying regime falls outside the authority of Parliament, and that it is void for being vague. As remedy, the RCC is asking the Federal Court of Appeal to set aside those parts of the decision slapping a levy on non-removable memory in digital audio recorders, and to declare that the zero-rating program used by the CPCC to exempt groups such as libraries and software companies from paying the tariffs. Observers have noted since hearings leading to the decision, which began a year ago, that the retailers’ argument was expected. On the first day of those hearings, Macera Jazyrna lawyer Howard Knopf began laying the groundwork for the appeal, with pointed questions about terminology related to the private copying regime, particularly the use of the word "levy" in public materials (CNM, Jan. 23/03). Knopf also spent considerable time on the issue of a levy on devices - which at one point led board chair John Gomery to say, "I’m not persuaded the board has the authority to put a levy on devices…Devices are out." In final arguments last March, Knopf’s colleague John Macera went again to the constitutional question on behalf of the retailers, foreshadowing the current application for review. He told the board: "The levy is not a payment by an individual who engages in private copying. The levy is paid on blank recording media, even if such media is never used or intended to be used to copy music. The levy scheme lacks the necessary corelation between the persons paying the levy, the uses to which the media are made, and the performers and authors and creators who may ultimately receive the benefit of the monies raised. The zero-rating scheme demonstrates that the levy scheme is arbitrary in who can be zero-rated and what product it applies to. For all these reasons, the levy is a tax and did not properly become law through a ways and means motion, then it is void." While Macera’s arguments would seem to be the broad strokes of the RCC’s case, in a recent interview, Knopf kept the group’s strategy close to his chest. He challenges those who argue that the constitutional question has been asked and answered. He tells Canadian NEW MEDIA that the only rulings on the issue have been made by the board itself. "There is no constitutional ruling to date from a court…The Copyright Board has ruled on it twice now. the decision is clearly reviewable by the Federal Court of Appeal, and I don’t think anyone would take issue with the fact that it’s reviewable on the basis of correctness." Speaking outside the context of the case he’s preparing for the RCC, Knopf says the issue must also be considered on a bigger canvas that includes the issue of Tariff 22, now being considered by the Supreme Court of Canada. " is asking for money for ISPs, which is to say all Internet users, for music on the Internet. But the private copying tariff is asking for what? It’s asking for levies on blank media which are used to download music from the Internet. So, although one would have thought that these were completely separate matters, quite a lot of intelligent people are showing a lot of evidence of confusion and conflation on the issue. You know what? They may be right. I hope they’re not, but they may be right, and we may have a serious problem both for the courts and for Parliament to straighten out. Because, how many times over does the poor consumer have to pay for the same act? And then, to add insult to injury, to be sued for it, which is what is talking about right now… "All of this is somewhat predicatable, and the fact that they still haven’t figured out a business model or a technological model to deal with it is their problem. But they’re asking 12-year-old girls to pay for it. Having said that, I think there’s probably no coincidence in the fact that two days, or whatever it was, after the Copyright Board decision came out, they say, ‘we’re going to sue those 12-year-old girls.’ And a day after the judicial review applications were filed, they said, ‘well, we’ve got a list of 40 that we’re going to sue… "I think the grand plan has been there a while. The details are becoming apparent as we go." Sharon Maloney, senior counsel for the RCC, echoes Knopf’s comments. "I think at the end of the day what needs to happen is Parliament has to look at the program we have and look at all of the pieces in its entirety. You cannot sort of carve off little pieces. That’s why, I think, we find ourselves exactly in the situation where we are where you’ve got a private copying levy. At the same time as we are forcing Canadians to pay a levy on their CDs, we’ve got CRIA threatening to sue people for downloading music from the Internet, plus we’ve got the SOCAN decision before the Supreme Court with respect to service providers. Well, how many times should Canadians be asked to pay to protect the artists? Unfortunately, we’re not looking at it in its entirety." Maloney says the controversial zero-rating scheme - ruled illegal in confusing language in the board’s December decision - must also be dealt with. "From our perspective, what disturbs us, just as the Copyright Board said, is you actually have the beneficiaries of the levies acting as the party who determines who’s going to get the benefit of that exemption. We philosophically think that’s wrong. If there is going to be a program like that, there has to be oversight and oversight where there’s some accountability. There is no accountability from CPCC to anyone in terms of what they’re doing… "Second, what really ends up happening, we think, is as CPCC carves out markets where people can access CDs without having to pay the levy, well, that definitely has an impact at retail in terms of customer base and markets." She says the program has been used mostly to shield the CPCC from criticism of the entire levy regime. "The other thing, from a policy perspective or a political perspective, is eventually what you end up doing is you silence criticism of the program. That’s not good, in our view, because we think that the program is flawed. Policies or programs that allow for buying off someone’s criticism isn’t something we think is good policy or good legislation." CPCC asks for zero-rating clarification On the other side of the fence, the CPCC has also launched a challenge to the board’s decision on the basis of what it considers vague language on the subject of zero-rating. In its application for review, the CPCC asks the higher court to set aside the declaration that the regime is illegal and to confirm that existing agreements between the organization and various manufacturers, importers, distributors and other users of blank media are legal. Says Paul Audley, speaking on behalf of the CPCC: "A number of participants have asked for clarity. The current situation is, without question, confusing. The confusion, the CPCC believed, the board could easily resolve, but it has decided that it can’t do so. I don’t think I’m the right person to debate the merits of that decision. But, the purpose of is in fact to provide clarity for everyone who’s participating in the program and for purposes of future Copyright Board proceedings - so we don’t have to carry this around as baggage into the future." The CPCC had asked in mid-December that the board clarify its ruling, since it declared the zero-rating scheme illegal at the same time that it said, "the Board cannot compel CPCC to collect the levies, if it has so decided." The board ruled, however, that it was, "without jurisdiction to correct or modify its decisions, nor to clarify the reasons supporting them," and dismissed the application. A third application for judicial appeal was also filed by a group of computer manufacturers, including Apple Canada Inc., Dell Computer Corp. of Canada, Hewlett-Packard (Canada) Co., and Intel Corp. Asking that the part of the board’s decision dealing with embedded memory be set aside, the coalition argues that "the Board erred in law as to its jurisdiction, took into account irrelevant matters, or failed to take into account relevant matters, in coming to the decision that ‘digital audio recorders’ with embedded non-removable memory constitute an ‘audio recording medium’ leviable under Part VIII of the Copyright Act…"

Expected constitutional challenge to private copying decision takes first step

News | 01/26/2004 5:00 am EST

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