SCC determines users shouldn’t pay for royalties twice under Copyright Act

The Supreme Court of Canada says Canada’s Copyright Act “does not exist solely for the benefit of authors,” in a decision in which it found that the Copyright Board erred in its interpretation of the Copyright Act’s “making available right.” “What matters is what the user receives, not how the user receives it,” Justice Malcom Rowe wrote in the Friday decision, on behalf of the Supreme Court judges. The court found that, in regard to streaming, the Copyright Act clarifies that a work is “communicated” when it is made available or uploaded online, which already attracts a royalty. Rowe said that streaming is part of “one continuous act” that began when the work was made available online, therefore, it only requires that one royalty be paid. The court noted that under Canada’s copyright laws, authors have three rights: to produce or reproduce a work in any material form; perform a work in public; and publish an unpublished work. The court found that only one royalty can be charged per protection. “If a work is streamed or made available for on˗demand streaming, the author’s performance right is engaged. If a work is downloaded, the author’s reproduction right is engaged. If a work is made available for downloading, the author’s right to authorize reproductions is engaged. There are no gaps in protection,” Rowe wrote in the decision. Section 2.4 of the Copyright Act, which outlines the scope of the bill, reads that “ for the purposes of this Act, communication of a work or other subject-matter to the public by telecommunication includes making it available to the public by telecommunication in a way that allows a member of the public to have access to it from a place and at a time individually chosen by that member of the public.” Rowe noted that if Parliament wanted the act of “making available” to be a protected right, it should have added it as a fourth copyright interest as opposed to part of the scope of the act. “Nothing in the text of s. 2.4(1.1) indicates that Parliament intended to allow authors to charge two royalties for a single protected activity,” Rowe wrote, adding that previous court cases determined that downloads and streams are a single activity. The decision marks the end of an almost decade-long debate about modern copyright law. The history of today’s laws began in 1997 when Canada signed the WIPO Copyright Treaty, one of two treaties for adapting international copyright rules to emerging technologies. Authors of literary and artistic work were granted the “exclusive right to make their works available to the public in such a way that members of the public may access these works from a place and at a time individually chosen by them.” In 2012, Parliament updated its Copyright Act to clarify that “communication of a work or other subject‑matter to the public by telecommunication includes making it available to the public by telecommunication in a way that allows a member of the public to have access to it from a place and at a time individually chosen by that member of the public.” In 2013, the Society of Composers, Authors and Music Publishers of Canada (SOCAN) argued in a proceeding in front of the Copyright Board that the Copyright Act’s then-new making available right extended SOCAN’s communication right to cover download music services, meaning SOCAN could collect royalties when copies are offered for download. Royalties for copies that are then downloaded are covered by a separate reproduction tariff for making copies, which is collected by other copyright societies. Canadian telecoms and international giants like Apple Inc., Alphabet Inc.’s Google and Microsoft Inc. responded at the time that those legislative amendments created no such right. The Copyright Board ruled in 2017 that the act of making works available to be a separately protected and compensable activity. Groups like SOCAN had the right to collect royalties on music that has been made available for download online. But because the board declined to set a tariff, the value of those royalties for the years that were under consideration by the Copyright Board was zero. SOCAN took the decision to the Federal Court of Appeal, arguing the board erred by not applying rates on those royalties, while Apple and the Entertainment Software Association appealed the making available right. Last year the appeal court came to its decision that the Copyright Board was wrong in extending the making available right to downloads in 2017. The Supreme Court of Canada took up the case after SOCAN decided to contest the Federal Court of Appeal’s decision. The court found that the Copyright Board’s interpretation of the new section of the Copyright Act was inconsistent with the text and purpose of the law and how it operates, and ran contrary to previous decisions of the Supreme Court in other copyright cases. It added that “it violates the principle of technological neutrality by requiring that users pay additional royalties to access works online. Distributing functionally equivalent works through old or new technology should engage the same copyright interests.” – Reporting by Jenna Cocullo at jcocullo@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca.

SCC determines users shouldn’t pay for royalties twice under Copyright Act

Broadcast | July 15, 2022

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SCC determines users shouldn’t pay for royalties twice under Copyright Act

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