Copyright law a win for consumer, educators, and telecoms as court reins in multiple fees
Published on Thursday July 12, 2012 Morgan Campbell and Ashante Infantry Business Reporters
Consumers and educators emerged victorious in several significant Supreme Court of Canada rulings that effectively modernize Canadian copyright law.
Thursday, the court released its judgments in five different cases that touched on tariffs set by the Copyright Board governing music downloading, photocopying textbooks, videogames and movie and TV soundtracks.
All cases pitted the societies that collect fees on behalf of creators against the distributors or users of the copyrighted materials.
And for the most part, the rulings benefit the public while potentially leaving songwriters and performers a little poorer.
“I think it’s definitely pro-consumer,” said University of Ottawa law professor and Toronto Star columnist Michael Geist. “It’s also a pro-business decision as the court has recognized that innovation that is so crucial for the Canadian economy relies on flexibility in copyright.”
In one of the biggest cases, school boards across the country faced off against a body that collects royalty fees for publishers. The court sided with the educators.
Queen’s University professor Laura Murray pointed out universities and school boards already pay an annual tariff for the right to photocopy parts of textbooks; an extra fee on each individual work copied, which the court rejected, would have sent costs spiraling.
“It restores a measure of common sense to Copyright debate,” says Murray, who co-authored Canadian Copyright: A Citizen’s Guide. “We still have to buy stuff if we’re using a lot of it, but if we need little bits, then we’ve got to get on with our lives, and anybody who has taught knows this . . . Copyright is going to cover the commercial market for works, and it still does.”
Cynthia Andrew, a policy analyst for the Ontario Public School Boards Association says school boards currently pay the Copyright Board about $5.16 per student per year. She thinks that figure might drop next year as a result of this ruling.
But just as important as saving money is the Supreme Court’s support for the idea of “fair dealing,” experts say.
That means while it’s unfair for a teacher to photocopy an entire textbook to avoid buying it, the average teacher copies fewer than 10 pages per student per year, Andrew says.
Countries like the United States, Germany and Japan already have similar guidelines in place, she said.
Music downloaders and telecoms also won as the Justices upheld previous decisions of The Federal Court of Appeal and Copyright Board that cable and other Internet providers should not have to pay royalties on song downloads or the free, 30-second song previews they offer shoppers.
The clips, which are automatically deleted and often of lesser quality than the musical works themselves, count as research which helps consumers determine what music to purchase, the court said.
The Society of Composers, Authors and Music Publishers of Canada (SOCAN) had argued that “since the evidence showed that each user, on average, listened to 10 previews before purchasing a musical work for download, the overall amount of time spent listening to previews was so large that the dealing was unfair.”
The organization suggested other methods, like advertising, album artwork, textual descriptions, and user-generated album reviews, were available to help users identify potential music for purchase.
Had they prevailed, consumers should not have seen a levy on previews, said Eric Baptiste, CEO of SOCAN.
“To the best of our knowledge, there’s no significant difference in price point for business models in countries that have this viewing situation for previews compared to countries that don’t have it.”
The court’s findings reflect a discomfort with the “layering of rights,” Geist said.
For example, a business that had bought the required licensing right being forced to pay another fee when a song is downloaded by a consumer.
“Suddenly now they’re being nickel-and-dimed,” Geist said. “It’s clear the public has been frustrated and concerned with that kind of evolution. It feels as if the courts almost just said ‘Enough!’ The payment is of course appropriate, but multiple payments for basically the same thing isn’t.”
The justices instead determined there should be no copyright fees levied on cable companies or other digital providers when music is downloaded, but that artists should be compensated when it is streamed online.
SOCAN is taking its time to parse the “disappointing” downloading ruling which means the potential loss of royalties from permanent downloads, 3.1 per cent, for example, on each iTunes track purchased.
A lawyer for Rogers Communications Inc., one of the digital service providers that went up against SOCAN, said the industry is now owed roughly three cents for every song downloaded in Canada between 1996-2006.
SOCAN has been collecting money for both streaming and downloading but has not distributed the funds to its members given the pending cases.
“From our own perspective the court got it right: streaming is a very important and growing part of the digital business . . . because people want instantaneous access to music and are not really wanting to have a permanent copy of music on a device,” Baptiste said.
But Peter Cardinali, a Toronto-based musician, producer and record executive, said: “This is the bottom line — composers and music producers depend on these ever shrinking performance royalties to make a living and to be able to continue creating music. For years now, film and TV composers have been forced to reduce, or in some cases, forfeit their up-front fees, as well as share or give away their publishing to the production companies (some are even partnered with the Internet Service Provider owners), with the promise/lure of a generous ‘back end’ (i.e. performance royalties). Now?”
The judges also ruled movie theatres, broadcasters and cable companies shouldn’t be charged for the music that’s part of a film or a TV program they are showing.
“It seems incongruous that songwriters should be compensated when their work is broadcast on TV and in motion pictures, while the actual performers of the recordings are not,” said Ian MacKay, president of Re: Sound Music Licensing Company, a non-profit dedicated to obtaining fair compensation for artists and record companies for their performance rights.
“That being said it is the Supreme Court’s role to interpret the law as it exists, not as it should be. Unfortunately, Canada’s copyright law has today been found to put Canadian recording artists and record companies at a disadvantage in the international marketplace.”
Similarly, the court ruled software companies that sell video games online should not have to pay royalties for the music included in the games.
Video game manufacturers argued that a royalty would be redundant given they already pay licensing fees for the pop songs used in games like “Guitar Hero,” and own the copyrights to original music used in games.
David Fewer, director of the Canadian Internet Policy and Public Interest Clinic, said the decision ensures a sleekerbusiness model for video game manufacturers.
“When you think about the Internet as a platform for doing business, this is a huge win because it cuts down the amount of red tape you have to deal with,” says Fewer. “For software or (television shows) or film or even eBooks, all that stuff would have run into this second layer of copyright clearance. Any layer of clearance is a pain . . . It makes (products) more expensive.”