In a good year, the Supreme Court of Canada might take one copyright case, so it was quite the occasion when on July 12 it handed down judgments in five, all of which concerned tariffs, or royalties, proposed to Canada’s Copyright Board. Canadian courts strive to balance copyright owners’ and users’ rights, and here the court emphasized this goal, largely coming down in favor of expanding user rights in this collection of cases that considered new technologies, the Internet and content.
“Miraculously, all five of these [cases] were granted an audience by the Supreme Court,” says Sheldon Burshtein, a partner in the Toronto office of Blake, Cassels & Graydon. “When the court takes one copyright case, it’s a big deal. When it takes five, it’s a huge deal. And to release all five in a package is an even bigger deal.”
The flood of decisions is keeping copyright experts and copyright owners enforcing their rights in Canada busy as they parse the decisions and try to come to a consensus on what the court has done and what the impact of these cases will be. On a few principles, however, the Supreme Court made obvious waves.
A number of the cases addressed the principle of fair dealing, which is similar to the fair-use concept in U.S. copyright law. If using or copying a copyrighted work is determined to be a fair dealing, the user or copier does not infringe the copyright, and tariffs are not payable.
In the U.S., determining fair use involves an assessment of fairness, but in Canada fair dealing is determined through a two-stage analysis. The first step looks at whether the dealing’s purpose falls under the allowable categories of research, private study, criticism, review or news reporting. (In June, Parliament passed Bill C-11, which will add education, parody and satire to those purposes.) If the conduct falls into one of those categories, the next step is a six-factor, heavily fact-specific analysis of whether the dealing is fair.
In SOCAN [The Society of Composers, Authors and Music Publishers of Canada] v. Bell Canada, the court considered whether tariffs should be paid on the 30- to 60-second streaming song previews made available by online music vendors. The Supreme Court rejected the proposed tariff, determining that consumers use the previews for the purpose of research—identifying what music to purchase. It took a broad view of the category of research, noting that it “can be piecemeal, informal, exploratory, or confirmatory. It can in fact be undertaken for no purpose except personal interest.”
The court further explained that it had previously mandated “a generous interpretation of the fair dealing purposes.”
In so ruling, the court effectively has shifted Canada’s concept of fair dealing closer to the U.S.’s fair-use system, says Michael Geist, a law professor at the University of Ottawa and an expert in Internet and e-commerce law.
“What the court has done most emphatically in these decisions is to make the first-stage test have such a low threshold and be interpreted in such a broad manner that virtually everyone can qualify for that first-stage purpose,” Geist says.
The court did just that in another of the July 12 cases, Alberta v. Access Copyright, which applied the fair-dealing test to photocopies of textbooks and other copyrighted works that teachers distribute to their classrooms for instruction. The 5-4 majority of the court said there was “no dispute” that classroom use falls under the allowable category of private study.
Moving on to the second stage, the court took a notable approach to one of the six factors in the fairness analysis, “the purpose of the dealing,” considering the purpose not only of the copier but also of the beneficiary of the copy itself.
Fair dealing, the court said, is a “user’s right,” and therefore “purpose” should be considered from the student’s perspective. It continued, “The teacher/copier shares a symbiotic purpose with the student, who is engaging in research or private study.” Similarly, the court concluded in the song previews case that the “guiding perspective” is the consumer’s and that service providers merely facilitate the consumer’s research.
“The court has sent a very strong message about the flexibility that exists within fair dealing,” Geist says. “That could play a significant role for many online services, like search engines that make copies but do so effectively for a different beneficiary as part of their business line.”
The Supreme Court also emphasized the importance of technological neutrality in several of the cases, most evidently in Entertainment Software Association v. SOCAN. In the case, the software group Entertainment Software Association challenged a tariff the Copyright Board had approved for the musical works contained in downloaded video games. On top of the royalties the video game companies already pay for performance rights, SOCAN argued that a separate communication tariff should apply to the music because it is transmitted electronically. The court rejected the argument 5-4, saying that to impose an additional layer of fees “based solely on the method of the delivery of the work” violates technological neutrality, or the principle that the Copyright Act must apply equally to traditional and more technologically advanced forms of media.
“The court may have alluded to this concept in previous cases, but until these decisions were released, we didn’t know it would become an important principle of statutory interpretation in relation to the Copyright Act,” says Kevin Sartorio, an IP litigator in Toronto and chair of Gowlings’ national copyright practice group.
As the court is asked more and more often to consider how Canada’s Copyright Act should be interpreted in a digital environment, its affirmation of technological neutrality could have a dramatic impact on future cases and, Burshtein says, could reduce barriers for online businesses.
Additionally, it will likely arise in challenges to the provisions of Bill C-11 that prohibit the circumvention of technological protection measures on digital works for the first time under Canadian law.
“I suspect someone will come along and seek to challenge or limit the scope of these provisions by saying that they fail to preserve the traditional balance between creators and users in that they add a new layer of protection based only on the fact that the work is in the digital environment,” Sartorio says.