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. Society of Composers, Authors and Music Publishers of Canada v. Entertainment Software Association

In Society of Composers, Authors and Music Publishers of Canada v. Entertainment Software Association (SCC, 2022) the Supreme Court of Canada sings the praises of 'technological neutrality' as one of the bases for the Copyright Act:
(2) Purpose of the Copyright Act

[62] The Board’s interpretation of s. 2.4(1.1) also undermines the purpose of the Copyright Act because it violates the principle of technological neutrality.

[63] The principle of technological neutrality holds that, absent parliamentary intent to the contrary, the Copyright Act should not be interpreted in a way that either favours or discriminates against any form of technology: CBC, at para. 66. Distributing functionally equivalent works through old or new technology should engage the same copyright interests: Society of Composers, Authors and Music Publishers of Canada v. Bell Canada, 2012 SCC 36, [2012] 2 S.C.R. 326, at para. 43; CBC, at para. 72. For example, purchasing an album online should engage the same copyright interests, and attract the same quantum of royalties, as purchasing an album in a bricks-and-mortar store since these methods of purchasing the copyrighted works are functionally equivalent. What matters is what the user receives, not how the user receives: ESA, at paras. 5-6 and 9; Rogers, at para. 29. In its summary to the CMA, which precedes the preamble, Parliament signalled its support for technological neutrality, by stating that the amendments were intended to “ensure that [the Copyright Act] remains technologically neutral”.

[64] The Board’s interpretation of s. 2.4(1.1) violates the principle of technological neutrality because it requires that users pay additional royalties to access works online. To illustrate, consider a retailer that allows customers to purchase a digital or physical copy of an album. Regardless of whether the work is sold digitally or physically, the author’s reproduction interest in s. 3(1) is engaged because the user receives a durable copy of the work: ESA, at para. 31. The author is therefore entitled to a reproduction royalty. But under the Board’s interpretation of s. 2.4(1.1), purchasing the album online would entitle the author to an additional royalty — a performance royalty for making the work available for online purchase. Similarly, streaming the album online would require paying a “making available performance” royalty and a “streaming performance” royalty. But playing that same album on the radio would only require paying one performance royalty. Requiring that users pay additional royalties based solely on the mode of the work’s distribution violates the principle of technological neutrality.

[65] The appellants concede that the Board’s interpretation of s. 2.4(1.1) is not technologically neutral. They submit, however, that Parliament intended to derogate from the principle by passing s. 2.4(1.1). Because works can only be “made available” online — since there is no bricks-and-mortar way for the public to access a work at a time and place of their choosing — the appellants submit that Parliament must have intended to impose additional royalties on works distributed online.

[66] This is entirely unpersuasive. Clear legislative intent would be needed to derogate from the principle of technological neutrality given its central importance to the scheme of the Copyright Act. To appreciate why, it is necessary to situate the principle within the Act.

[67] Copyright law does not exist solely for the benefit of authors: York University v. Canadian Copyright Licensing Agency (Access Copyright), 2021 SCC 32, at paras. 90-91. Its overarching purpose is to balance users’ and authors’ rights. It does this by securing just rewards for authors while facilitating “public access to and dissemination of artistic and intellectual works, which enrich society and often provide users with the tools and inspiration to generate works of their own”: Access Copyright, at para. 92; see also Théberge, at paras. 30-31.

[68] The Copyright Act uses various tools to achieve this balance. Fair dealing, for example, promotes this balance by allowing “users to engage in some activities that might otherwise amount to copyright infringement”: Bell, at para. 11; see also Access Copyright, at para. 90. Similarly, the idea/expression dichotomy protects this balance by extending copyright protection to only original artistic expressions, not original ideas. This ensures that the public can freely use new ideas to inspire their own original works: CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 SCC 13, [2004] 1 S.C.R. 339, at para. 8; A. Drassinower, “Copyright Is Not About Copying” (2012), 125 Harv. L. Rev. F. 108, at p. 111.

[69] Like fair dealing and the idea/expression dichotomy, the principle of technological neutrality is a tool for balancing users’ and authors’ rights. It ensures that authors retain the same rights over their works regardless of the technological means used to distribute those works. If the Copyright Act entitles authors to receive a certain royalty when their work is reproduced or performed offline, technological neutrality preserves an author’s right to receive that same royalty when their work is reproduced or performed online. As a corollary, it also protects users by preventing authors from extracting more royalties merely because their work is reproduced or performed online. As Professor Carys J. Craig explains in “Technological Neutrality: (Pre)Serving the Purposes of Copyright Law”, in M. Geist, ed., The Copyright Pentalogy: How the Supreme Court of Canada Shook the Foundations of Canadian Copyright Law (2013), 271,
[t]his principled recognition of copyright as requiring a sensitive public policy balance, rather than simply the protection of a private property right, has had a marked impact on the landscape of Canadian copyright law. If copyright in general requires this balance, then it must surely follow that copyright in the digital era requires the preservation of this balance, which must mean that the law should have the same effect (produce a similar balance of rights and interests) whether applied offline or online. [Emphasis in original; p. 292.]
[70] With this context in mind, I am not persuaded that, in adopting s. 2.4(1.1), Parliament intended to derogate from the principle of technological neutrality. The principle of technological neutrality is designed to operate precisely in situations like the present case, where a novel technology emerges that has no clear traditional equivalent. In those circumstances, courts must look at what that new technology does to the substance of the work by examining which, if any, of the copyright interests in s. 3(1) are engaged by this new method of distributing a work. If that new technology gives users durable copies of a work, the author’s reproduction right is engaged. If the new technology gives users impermanent access to the work, the author’s performance right is engaged. What matters is what the user receives, not how the user receives it.

[71] With that said, copyright is a creature of statute. Parliament can therefore always choose to derogate from the principle of technological neutrality: Keatley Surveying Ltd. v. Teranet Inc., 2019 SCC 43, [2019] 3 S.C.R. 418, at para. 40. But derogating from this principle means significantly altering the balance between users’ and authors’ rights that has been foundational to the Copyright Act for decades: Keatley, at paras. 43-44. In this case, it would tilt the balance significantly in favour of authors. Users would face increased costs and be penalized for using certain new and improved technologies.

[72] Thus, courts should not conclude that Parliament intended to derogate from the principle of technological neutrality unless there is strong evidence that this was Parliament’s intent: see, for example, CBC, at paras. 50-51. That is not the case here. As discussed, the text of s. 2.4(1.1) and its placement in the Copyright Act does not support the view that Parliament wanted to make downloads and streams subject to two royalties. Further, as I will discuss next, giving effect to the WIPO Copyright Treaty does not demand this interpretation.

[73] Since there is no persuasive basis for concluding that Parliament intended to derogate from the principle of technological neutrality, s. 2.4(1.1) should be interpreted in a way that is technologically neutral: reproducing or performing a work online or offline should engage the same copyright interests and require the same royalties.
. 2424508 Ontario Ltd. v. Rallysport Direct LLC

In 2424508 Ontario Ltd. v. Rallysport Direct LLC (Fed CA, 2022) the Federal Court of Appeal considered a rare copyright statutory damages case.

. Pyrrha Design Inc. v. Plum and Posey Inc.

In Pyrrha Design Inc. v. Plum and Posey Inc. (Fed CA, 2021) the Federal Court of Appeal considered basics of copyright infringment and the doctrine of originality:
[38] In Phillip Morris Products SA v. Marlboro Canada Ltd., 2010 FC 1099, 374 F.T.R. 213 (Philip Morris FC) (affirmed on appeal on the issue of copyright 2012 FCA 201 (Philip Morris FCA), 434 N.R. 207, leave to appeal refused [2012] SCCA No. 413, [2012] C.S.C.R. No. 413), the Federal Court held, at paragraph 315, that in order to establish infringement, two essential elements must be established:
First, there must be a sufficient similarity between the works in question such that the allegedly infringing work could be considered a copy or reproduction of the protected work. In other words, there must be proof of substantial similarity between the original work and the allegedly infringing work. Whether the Defendants have infringed copyright by taking a substantial part of a copyrighted work is essentially a question of fact. Second, the Plaintiffs must prove that the Defendants had access to the work protected by copyright; that is to say, that the copyrighted work was the source from which the allegedly infringing work was derived. This is sometimes referred to as a “causal connection”.
[39] In Cinar Corporation, cited above, the Supreme Court considered what is required to demonstrate that a "“substantial part”" of a work has been reproduced. At paragraph 26 the Court held:
A substantial part of a work is a flexible notion. It is a matter of fact and degree. “Whether a part is substantial must be decided by its quality rather than its quantity”: Ladbroke (Football), Ltd. v. William Hill (Football), Ltd., [1964] 1 All E.R. 465 (H.L.), at p. 481, per Lord Pearce. What constitutes a substantial part is determined in relation to the originality of the work that warrants the protection of the Copyright Act. As a general proposition, a substantial part of a work is a part of the work that represents a substantial portion of the author’s skill and judgment expressed therein.
[40] A reviewing court is required to engage "“in a qualitative and holistic assessment of the similarities between the works”" (Cinar Corporation, paragraph 41). The perspective of a layperson was said in Cinar Corporation to be a "“useful”" perspective, however the question of whether a substantial part of a plaintiff’s work has been copied "“should be answered from the perspective of a person whose senses and knowledge allow him or her to fully assess and appreciate all relevant aspects — patent and latent — of the works at issue. In some cases, it may be necessary to go beyond the perspective of a lay person… and to call upon an expert to place the trial judge in the shoes of “someone reasonably versed in the relevant art or technology””" (Cinar Corporation, paragraph 51).

....

[62] In Robertson v. Thomson Corp., 2006 SCC 43, [2006] 2 S.C.R 363, the Supreme Court wrote at paragraph 81:
In CCH, originality was held to encompass the exercise of “skill and judgment” by an author: see para. 16. Every copyrighted work — individual or collective — is the product of the exercise of skill and judgment. In determining, therefore, whether a work like a newspaper, or “any substantial part thereof”, has been reproduced, what will be determinative is the extent to which the item said to be a reproduction contains within it, in qualitative rather than quantitative terms, a substantial part of the skill and judgment exercised by the creator of the work: see Édutile Inc. v. Automobile Protection Assn., 2000 CanLII 17129 (FCA), [2000] 4 F.C. 195 (C.A.), at para. 22.

(Emphasis added)
. York University v. Canadian Copyright Licensing Agency (Access Copyright)

In York University v. Canadian Copyright Licensing Agency (Access Copyright) (SCC, 2021) the Supreme Court of Canada reviewed the history of collective copyright administration at paras 47-76.

. Bell Canada v. Copyright Collective of Canada

In Bell Canada v. Copyright Collective of Canada (Fed CA, 2021) the Federal Court of Appeal decided a judicial review of a rate case from the Copyright Board of Canada. The case is quite technical and complex but is worthwhile reading for anyone wanting to see how copyright royalty rates are set, and how copyright and telecommunications interrelate in Canada today.

. York University v. The Canadian Copyright Licensing Agency (Access Copyright)

In York University v. The Canadian Copyright Licensing Agency (Access Copyright) (Fed CA, 2020) the Federal Court of Appeal considered a copyright dispute between the Canadian Copyright Licensing Agency [SS: a "collective society" under the Copyright Act, ] and York University, with several intervenors. In the course of the ruling the court set out these useful comments on copyright-related charges:
[37] Since much of the argument was framed in terms of whether Copyright Board approved tariffs are mandatory, it is perhaps useful to begin by clarifying what it means to say that a tariff is mandatory. When Access Copyright says that the tariff in issue here is mandatory, it means that a user becomes liable for payment of the royalties stipulated in the tariff if it engages in any copying which constitutes infringement, i.e., copying which was not authorized by the copyright holder or which does not come within any of the users’ rights set out in the Act, such as fair dealing. A user’s liability to pay royalties depends upon his or her use of works in Access Copyright’s repertoire and not upon any assumption of liability for payment.

[38] There is an important distinction between liability for royalties and liability for damages for infringement. In the absence of a tariff, a user who infringes copyright becomes liable for damages for infringement in an amount equal to damages the owner of the copyright has suffered as a result of the infringement: see Act, s. 35(1). Those damages are assessed by a court. However, in the case of a mandatory tariff, the owner’s remedy is an action to enforce the tariff. In effect, the royalties set out in the tariff become a form of statutory damages. This distinction becomes blurred when Courts use the tariff as a means of calculating damages. One example of this approach among many is Society of Composers, Authors and Music Publishers Canada v. 348803 Alberta Ltd., 79 C.P.R. (3d) 449, 1997 CanLII 5389 (F.C.), where the following appears (at 452):
Where it is customary to licence the use of a work, music in this instance, damages may be measured on the basis of the usual royalty or licence fee. The licence fees for music are calculated using given figures and rates from the Copyright Board Tariffs and various statistics as to the operation of the licensee.
. York University v. The Canadian Copyright Licensing Agency (Access Copyright)

In York University v. The Canadian Copyright Licensing Agency (Access Copyright) (Fed CA, 2020) the Federal Court of Appeal considered a copyright dispute between the Canadian Copyright Agency and York University, with several intervenors. In the course of the ruling the court sets out an extensive copyright law history at paras 50-194.

. York University v. The Canadian Copyright Licensing Agency (Access Copyright)

In York University v. The Canadian Copyright Licensing Agency (Access Copyright) (Fed CA, 2020) the Federal Court of Appeal considered a copyright dispute between the Canadian Copyright Agency and York University, with several intervenors. The main issue in the case was whether interim 'tariffs', granted on Access Copyright application to the Copyright Board, were mandatory on York. The court held that they were not:
C. General Considerations

[200] Access Copyright raises a legitimate question when it asks why collective societies would incur the costs and delay inherent in having a tariff approved if it is not mandatory? The advantage of a tariff is that it is public notice of the terms on which the collective society is willing to grant a licence. There are economies involved for both the collective society and users in reducing transaction costs in licensing. A tariff could be one way of doing so though it is doubtful that these economies are available in the current regulatory environment. Whether the cost/benefit analysis justifies applying for a tariff will depend on a variety of circumstances including the extent to which the proposed tariff provokes objections and the Board’s process for dealing with those objections.

[201] The question of whether non-binding tariffs make financial sense to collective societies is an important one but, in the end, it does not assist in resolving in collective societies’ favour the consistent references in any iteration of the Act to licensing schemes and their administration.

[202] All of this emphasizes the fact that the collective society/tariff regime is a means of regulating licensing schemes which, by definition, are consensual. While there have been modifications in the statutory language used between 1936 and 2012, the continuous references to licensing schemes and the retention of the key elements of the 1936 Act leave little doubt that tariffs are not mandatory which is to say that collective societies are not entitled to enforce the terms of their approved tariff against non-licensees.

[203] It is also worthwhile pointing out that I have not lost sight of the fact that collective administration is intended to assist rights holders in enforcing their rights, particularly in the internet age. The assumption underlying Access Copyright’s argument on this issue is that effective enforcement requires mandatory tariffs. With respect, this is not self evident. The advantage of collective societies is that they allow rights holders to pool their resources to enable them to economically enforce their rights. This advantage exists even in the absence of mandatory tariffs. Furthermore, to the extent that the internet creates many opportunities for infringement, the enforcement of mandatory tariffs against many individual infringers is no different than the prosecuting infringement actions against many individual infringers. The statutory remedy is collective enforcement, not the substitution of one prohibited act for another.

D. Conclusion

[204] As a result, I conclude that a final tariff would not be enforceable against York because tariffs do not bind non-licensees. If a final tariff would not be binding, the conclusion can hardly be different for an interim tariff.

[205] Acts of infringement do not turn infringers into licensees so as to make them liable for the payment of royalties. Infringers are subject to an action for infringement and liability for damages but only at the instance of the copyright owner, its assignee or exclusive licensee. In the course of the hearing before this Court, Access Copyright candidly admitted that, given its agreement with its members, it cannot sue York for infringement in the event that some or all of the copies made by York are infringing copies. However, Access Copyright claims the right to enforce the tariff against non-licensee infringers; yet if the tariff is not mandatory then there can be no right to enforce it.

[206] As a result, the validity of York’s Guidelines as a defence to Access Copyright’s action does not arise because the tariff is not mandatory and Access Copyright cannot maintain a copyright infringement action. Therefore, I would allow York’s appeal from the judgment of the Federal Court with costs, set aside the Federal Court’s judgment, and dismiss Access Copyright’s action with costs.
. York University v. The Canadian Copyright Licensing Agency (Access Copyright)

In York University v. The Canadian Copyright Licensing Agency (Access Copyright) (Fed CA, 2020) the Federal Court of Appeal considered a copyright dispute between the Canadian Copyright Agency and York University, with several intervenors. York sought a declaration that a policy that they distributed in-house to students and professors setting out fair dealing would, if met by users, constitute fair dealing. The court dismissed the appeal from the trial division that dismissed the declaration request. In the course of the ruling the court of appeal set out an extensive review of the law of fair dealing at paras 210-308.

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