ISPs ruled not liable for music communications in SOCAN case

Internet service providers dodged a bullet June 30 when the Supreme Court of Canada found they aren’t liable for music communicated online. The court ruled in the Tariff 22 case that ISPs are merely conduits for content passing through their pipes, and that the Society of Composers, Authors and Music Publishers of Canada (SOCAN) can’t pursue a tariff from them. The court’s unanimous decision puts to rest a dispute that dates back to 1996, when Tariff 22 was first filed. SOCAN was originally pursing a licence fee of 3.5% of ISPs’ revenues as compensation for the pirated music traversing their networks. The case has since been through extensive Copyright Board of Canada and Federal Court of Appeal hearings over the years. The June 30 decision overturns an appeals court ruling that the caching functions performed by ISPs attract copyright liability, but upholds the lower court’s ruling that music hosted outside the country but coming into Canada is subject to a tariff - though not one payable by ISPs (CNM, May 16/02). The decision comes as little surprise after the Supreme Court justices clearly communicated their impatience during oral arguments with SOCAN’s position (CNM, Dec. 4/03). Music copyright holders, despite losing on the issue of the applicability of a tariff on ISPs, still cheer the decision. Canadian Recording Industry Association counsel Richard Pfohl tells Canadian NEW MEDIA that the court’s finding on territorial issues will "prevent the specter of Canada becoming a piracy haven." He says the ruling will prevent services from setting up shop in foreign countries to avoid paying royalties for music downloaded by Canadians. In its decision, the court found that "At the end of the transmission, the end user has a musical work in his or her possession that was not there before. The work has, necessarily, been communicated, irrespective of its point of origin. If the communication is by virtue of the Internet, there has been a ‘telecommunication’. To hold otherwise would not only fly in the face of the ordinary use of language but would have serious consequences in other areas of law relevant to the Internet, including Canada’s ability to deal with criminal and civil liability for objectionable communications entering the country from abroad." Pfohl also notes that the court has made explicit mention in the ruling that Canada still has not ratified international treaties that would give record companies an exclusive right of making available, or implemented a notice-and-takedown regime. The court writes: "In the United States, unlike Canada, detailed legislation has now been enacted to deal specifically with the liability of Internet intermediaries …Australia has enacted its Copyright Amendment (Digital Agenda)… The European Commission has issued a number of directives, as will be discussed. Parliament’s response to the World Intellectual Property Organization’s (WIPO) Copyright Treaty, 1996, (‘WCT’) and the Performances and Phonograms Treaty, 1996 remains to be seen. In the meantime, the courts must struggle to transpose a Copyright Act designed to implement the Berne Convention for the Protection of Literary and Artistic Works of 1886, as revised in Berlin in 1908, and subsequent piecemeal amendments, to the information age, and to technology undreamt of by those early legislators." The court also opened the door to a new notice-and-takedown regime to be legislated by Parliament, and as was called for by the Standing Committee on Canadian Heritage this spring. Justice Ian Binnie writes: "I agree that notice of infringing content, and a failure to respond by ‘taking it down’ may in some circumstances lead to a finding of ‘authorization’. However, that is not the issue before us. Much would depend on the specific circumstances. An overly quick inference of ‘authorization’ would put the Internet Service Provider in the difficult position of judging whether the copyright objection is well founded, and to choose between contesting a copyright action or potentially breaking its contract with the content provider. A more effective remedy to address this potential issue would be the enactment by Parliament of a statutory ‘notice and take down’ procedure as has been done in the European Community and in the United States." Pfohl says the discussion in the ruling of both the right of making available and of a notice and takedown regime will provide added fuel to see the committee’s recommendations adopted. On the other side of the fence, however, ISPs are saying the court’s finding on a notice and takedown regime is solidly on side with their own policies. Jay Thomson, assistant VP of broadband policy at TELUS Communications Inc., and a former head of the Canadian Association of Internet Providers, tells CNM, "Our position is that the court’s position is fully consistent with our position all along, which is that notice-and-takedown should be pursuant to a court order. Justice Binnie rightfully pointed out that ISPs could be put in a difficult position if they had to judge whether a copyright objection is well-founded, and to choose between contesting a copyright action or potentially breaching their agreement with the content provider as outlined in paragraph 127. So, in our opinion, since a court is the only body authorized to render a judgment as to whether a copyright objection is well-founded or not, it should be a court that issues a takedown order. And, as I said, we think that’s fully consistent with our position all along on notice-and-takedown as a follow-up, if necessary, to our preferred notice-and-notice approach." The court’s suggestion of a legislated solution to ISP liability when it has specific knowledge of infringing content on its network could also be accelerated in the wake of the federal election held June 28. The standing committee’s recommendations enjoyed all-party support, Pfohl notes. In a Parliament with no party holding a majority, the opposition parties will enjoy greater influence in crafting government policy, and may possibly have enough clout to overcome the stiff opposition to WIPO ratification that Industry Canada has been throwing up for years. But, note observers, much will depend on the new government’s priorities. Commentators on the June 30 decision have also noted that it is the latest in a series of decisions from various courts to tackle the issue of copyright in the digital age over the past two years. In its findings, the court leaned heavily on its own CCH decision (CNM, March 4/04) to find that ISPs don’t authorize communications, and should enjoy common carrier exemptions from liability. Binnie writes: "The operation of the Internet is obviously a good deal more complicated than the operation of a photocopier, but it is true here, as it was in the CCH case, that when massive amounts of non-copyrighted material are accessible to the end user, it is not possible to impute to the Internet service provider, based solely on the provision of Internet facilities, an authority to download copyrighted material as opposed to non-copyrighted material. Phase two now on tap The court’s ruling puts to bed phase one of the Copyright Board’s process into Tariff 22. It will likely be several months before the board begins phase two, which will set rates for the online communication of music for those parties that will still be responsible for paying them - likely such companies as streaming radio stations and the like. That process may be complicated by a new process looking at proposed tariffs for digital reproduction rights (see story in this issue). Those proposed tariffs include a tariff for music streamed online, and the outcome of that process may have an impact on the ultimate shape of Tariff 22. Lost in the SOCAN appeals has been the Neighbouring Rights Collective of Canada’s (NRCC) own 1999 Tariff 22 filing. The NRCC’s proposed tariff is substantially similar to SOCAN’s, but the organization has not yet decided what course of action it will take. NRCC counsel Sundeep Chauhan tells CNM that the body has not had a board meeting since the June 30 Supreme Court decision and so has not yet had an opportunity to determine the impact of the ruling or its future course of action. Its proposed tariff would impose a 5% levy on gross revenues for parties including ISPs.

ISPs ruled not liable for music communications in SOCAN case

News | 07/13/2004 4:00 am EDT

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Reuse & Permissions

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us