MP3 player levy struck down, but thorny copying issues remain

The Supreme Court of Canada has upheld an earlier ruling that quashed the levies charged on digital music players sold in Canada (CNM Update, Aug. 2/05). Further confusing the matter is that two organizations representing the copyrighted music industry have vastly different reactions: in a media release, the Canadian Private Copying Collective (CPCC) – a coalition of songwriters, recording artists, music publishers and record companies – expressed disappointment at the ruling, while the Canadian Recording Industry Association (CRIA) – a firm representing the producers of 95% of the music sold in Canada, and itself a CPCC member – called the decision a positive step. "We are, on this issue, a dissenting member ," says Graham Henderson, president of the CRIA. "We’re disappointed that artists are going to lose some compensation, but we’re optimistic because we now know the courts are saying this activity is illegal." The argument is one that Henderson has made in the past, including when the Federal Court of Appeal confirmed the Copyright Board of Canada’s private copying decision, while reversing the board’s decision that levies could be placed on the non-removable memory (CNM, Dec. 22/04) . The levies – up to $25 for a digital music player with more than 10 GB of memory – were being collected by device manufacturers, importers and retailers on behalf of the CPCC, which then apportions the levy money to the constituents of the Canadian music industry. Shortly after the ruling, Apple Computer Inc. and Sony of Canada Ltd. announced they would offer refunds in the amount of the levy with proof of purchase. Although many other forms of media that can be used to record music have had levies in place for some time, the CPCC first sought to have digital music devices such as Apple’s iPod and Dell Inc.’s Digital Jukebox made subject to the levy when it approached the Copyright Board in December 2003. The board ruled that the removable memory used in portable digital music players could not have levies placed upon it, because it could just as easily be used for non-copyrighted material in other devices. The non-removable or permanent memory found in such players, however, could be levied, since the purpose of these devices was primarily to play back recorded music. A year later, the Federal Court of Appeal granted the CPCC leave to contest the Copyright Board’s decision. If the CPCC had been hoping to gain a sympathetic ear and have both removable and non-removable media made subject to the levy, it was mistaken: the court ruled that the Copyright Board had erred in making even non-removable media fall under the levy’s provisions. The CPCC then took their case to the Supreme Court of Canada last February. Since portable digital players are sold with blank memories, the music onboard usually gets there one of two ways: from a legitimately purchased CD or online music pay-per-download service, then loaded onto the device; or, from a "peer" source, either an online file-sharing network or an unauthorized physical copy such as a CD-R. However, the copyright issue surrounding loading music onto such devices isn’t so cut-and-dried. According to the Supreme Court of Canada’s interpretation of Part VIII of the Copyright Act, the legislation "exchanges the ability to privately copy sound recordings for the payment of levies on blank audio recording media by manufacturers and importers of that media." This provision, referred to as the private copying rule or exemption, has been construed as an absolute right for consumers who legitimately buy music to copy it for use on another platform or device. That’s an interpretation of the law that Henderson vigorously refutes. "There’s nothing in Section 80 and subsequent sections that gives people the right to make private copies – you can look until your eyes bleed," says Henderson. "I would say 90% of the people making copies on their iPods are doing so illegally, unless you get the authorization of the rights owner by buying it through iTunes," says Claudette Fortier, the CPCC’s chair. "Private copying does not allow you to steal," she adds. Michael Geist, a University of Ottawa law professor who’s been following the case closely, begs to differ. "The Copyright Act does provide people with an unlimited right to make personal, non-commercial copies of music," he says, adding that not only does it grant the right, but it doesn’t even limit the number of copies a user can make – as long as they’re not used for commercial gain. Both Henderson and Fortier say the only time consumers can make any copies of recorded music is when the copyright holder expressly grants those rights – and you’ve paid the appropriate levy on the medium you’re recording to. "But there’s no obligation a record company to provide a product that would entitle you ," Henderson adds. "There’s no right on the consumer’s behalf that requires companies to make their product or artists available in a format that can be privately copied." Enter the difficult subject of anti-copying technology, found on a growing number of the CDs purchased today: Geist says the Copyright Act explicitly provides consumers with "fair use" or "fair dealing" rights, meaning that music lovers are well within the law if they choose to break anti-copying encryption on recorded music to render it copyable for personal use, including for download to a digital media player. However, the Supreme Court’s ruling comes at a time when Parliament is debating Bill C-60, a successor to the current Copyright Act, which should be passed this fall (CNM, June 24/05). One of the more contentious parts of the bill centres on whether or not there should be penalties for those who circumvent anti-copying measures, even for personal copying. "You wouldn’t be permitted to do it and argue private copying, although you could in theory argue something else," says Geist. Henderson, meanwhile, says he believes the public is starting to regard music copying in any form as unethical, and is beginning to respect the importance of copyright; as such, he says it’s likely politicians will side with the industry when it weighs Bill C-60. "I think they’re going to feel emboldened that society is onboard with this, and that the opponents of C-60 belong to a shrill, increasingly marginalized group of academics, activists and teenagers who want their books, music, television, and films for free," he says. Ironically, Geist says, the private copying exemption disproportionately benefits Canadian artists, who account for roughly a quarter of Canada’s music sales but collect more than 25% of levy money. "When the Canadian recording industry argues that this is a good thing, one of the things that they’re saying is that they’re happy to see Canadian artists get less compensation, at least through this system," Geist says. But any loss of compensation will be short-lived, Henderson claims. "You will always be better compensated in the market—you will never be well-compensated through levies. This decision takes a little bit of money away, but in the long-run will put more money into people’s pockets."

MP3 player levy struck down, but thorny copying issues remain

Broadcast | August 18, 2005

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