Will Copyright Board agree to hear CPCC’s new MP3 levy request?

Last month, the Canadian Private Copying Collective (CPCC) announced a return to a path it’s been down before: the group, which gathers levies on blank media and pools the funds for distribution to musical rightsholders, filed a tariff application with the Copyright Board of Canada proposing levies of up to $10 on flash memory cards and up to $75 on MP3 players, such as Apple Inc.’s iPod and Microsoft Corp.’s Zune."It is simply a matter of fairness that the creators of content, the creators of culture actually, should receive some compensation for the large volume of unauthorized and uncontrollable copying onto these media," Claudette Fortier, the CPCC’s chair, said in a media release announcing the proposed tariff for 2008 and 2009."Private copying is a fact – Canadians do it. And legislators, in recognizing this fact, chose to create the exception in the Copyright Act which allows individuals to make copies for personal use, in exchange for a levy on the blank audio recording media people ordinarily use to make these private copies. The CPCC’s ongoing research tells us that this new tariff proposal simply reflects current copying behaviour.""I think many people are astounded by what they’re trying to do this time," says Howard Knopf, counsel, Macera & Jarzyna/Moffat & Co. "The Federal Court of Appeal was very clear in 2004…that the Copyright Board has no jurisdiction to put a levy on devices such as MP3 players. The matter has already been decided. This is what lawyers call res judicata ."Knopf represented major electronics retailers such as Best Buy Canada Ltd., Costco Wholesale Canada Ltd. and Wal-Mart Canada in successfully overturning the 2003 Copyright Board ruling that initially approved such a levy on digital music devices. He says his clients are aware of the proposed tariff and are looking at it and their options; he spoke with Canadian NEW MEDIA at this time only in a personal capacity, and not necessarily on behalf of his clients.In 2004, after the levy on MP3 devices had been in place for nearly a year, the Federal Court of Appeal struck it down, noting that Part VIII of the Copyright Act – which governs the private copying regime – doesn’t give the Copyright Board the authority to impose a levy on devices, as opposed to media. The CPCC attempted to appeal to the Supreme Court of Canada, but the country’s highest court refused to hear the case.A "different ballgame" now?"I don’t know what part of the decision the CPCC doesn’t understand, and I’m certainly not persuaded by their semantics that it is somehow now a different ballgame," Knopf says.In support of its application, the CPCC references a poll Environics Research Group conducted on its behalf last June. In that survey, 60% of respondents agreed that music creators should be compensated when copies of their music are made without their authorization. The same survey asked those respondents who said they made private copies of works they owned for their thoughts on what might constitute a reasonable levy for different types of media. For four-fifths of those respondents, a levy of 30¢ on CD-Rs and CD-RWs would be fair and reasonable, while 79% said a levy of $40 on a 30-GB iPod or other digital audio recorder would be acceptable.The CPCC also claims to have advice from counsel that supports a new levy based not on the media inside digital music devices – exactly the thing that the Federal Court of Appeal said can’t have a levy applied to it – but rather the belief that the entire device itself is media.Knopf, however, is sceptical. "It would seem to me that at the very least it would be incumbent upon the CPCC to publish that analysis before they put the Copyright Board and numerous parties and the Canadian public to a lot of trouble," he says. The CPCC is also applying for an increase to the levy on blank CD-Rs, as well as trying once again for a levy on removable digital memory, such as flash cards. But Knopf points to the collective’s own figures, which show that at least 75%-80% of removable media card storage is for non-music-related content such as digital photographs and files. "Why should digital camera users be subsidizing the music industry?" he asks.As for the increase in the blank CD-R levy, Knopf says use of technology such as blank cassette tapes and CDs to store music may be waning, rendering the necessity of a levy academic at any price. "Intuitively it doesn’t seem like even music fans would be using blank CDs that way anymore," he says, adding that many people aren’t making copies of CDs to listen to in portable CD players or car stereos, because such devices are being replaced by newer ones that use solid state or hard drive media. And with the proliferation of video-capable models, even iPods and other digital music players are increasingly being used to house content other than recorded music.Extrapolating from published figures, Knopf says it appears the CPCC has collected somewhere between $180 to $200 million to date since levies on blank media were introduced. According to its most recent published financial data, however, the collective has distributed only $92 million of that to rightsholders to date. Figures for the last full year, 2006, have not yet been published. "They’ve got this huge war chest of money contributed by the public, and what are they doing? They’re using that war chest now to get an even bigger war chest based on something the court has said they can’t do, and…their own numbers don’t even make any sense," he says. "All of this indicates why the levy should just be repealed."Perhaps further fueling the argument for repealing the private copying levy is the controversy over whether or not the system endangers Canada’s ability to implement the 1996 World Intellectual Property Office’s treaties on phonographic recordings and performances, something that has been a goal of Heritage ministers under both the current Conservative minority government and previous Liberal governments. Keeping private copying levies in place and introducing the WIPO treaties’ provisions would nearly double the amount collected from consumers to supposedly compensate artists for the copying of their works.The reason for that sharp rise is the "national treatment" requirement written into the WIPO treaties, which would accord rights to foreign performers and record producers from WIPO member states equal to those to those of Canadians in matters such as the private copying levy. "Under the current system, at least we do not have to provide full national treatment – in other words, we do not have to pay foreign performers or foreign record producers. If we do ratify the WIPO treaties, the levy pie would potentially double in size, " Knopf says. While all composers, authors and publishers from Berne Convention countries – 162 nations as of July 2006 – are entitled to proceeds from the current levy system, only Canadian performers and record producers are currently eligible to benefit – unless Canada ratifies the 1996 WIPO treaties.But like implementing a levy on non-removable media, repealing the levy would have to be done by Parliament. The Conservatives are reportedly close to introducing a new bill to amend the Copyright Act, picking up where the previous Liberal government left off with Bill C-60, which died on the table when Parliament was prorogued. Knopf believes that the new government should abide by the promise it made in its March 19, 2005 Policy Declaration to eliminate the levy scheme. "This government claims to believe in free markets and non-intervention," Knopf says. "What could possibly be more interventionist than forcing Canadians to pay what is generally regarded as a ‘tax’ to subsidize the mostly foreign music industry on products that are immune from such a scheme in the USA, UK and Australia, for example, and are usually used for purposes other than copying music?""I don’t think that just tinkering with the scheme is a realistic option" says Knopf, "because it will open up a huge hornet’s nest." In his view, the regime’s demise is inevitable. "I think the only realistic options before Parliament at this point are to repeal it now or repeal it in the near future." A breakdown of the CPCC’s new private copying levy proposalMediaCurrent Rate Per Piece of Blank Media2008-2009 Proposed RateAudio cassettes of 40 minutes or more29 cents29 centsCD-R or CD-RW21 cents29 centsCD-R Audio, CD-RW Audio or MiniDisc77 cents85 centsSecure Digital (SD), Multimedia (MMC) and Sony MemoryStick removable electronic memory cards over 256 MB— no more than 1 GBn/a$2 — more than 1 GB but no more than 4 GBn/a$5 — more than 4 GBn/a$10 Digital audio recorders, by internal memory capacity— no more than 1 GBn/a$5 — more than 1 GB but no more than 10 GBn/a$25 — more than 10 GB but no more than 30 GBn/a$50 — more than 30 GBn/a$75

Will Copyright Board agree to hear CPCC’s new MP3 levy request?

Broadcast | March 9, 2007

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