The Federal Court of Appeal recently released an important
ruling on the scope of the fair-dealing exception, in a judicial
review of the Copyright Board's decision on SOCAN Tariff 22.A.
At issue was whether online music services have the benefit of the
fair-dealing exception in Section 29 of the Copyright Act
when they offer customers previews of music files of up to 30
seconds to help them select music to purchase. The court, following
the decision of the board, ruled that they do. As a result, no
royalties are payable to SOCAN for these previews.
Under Section 29, fair dealing for the purpose of research or
private study does not infringe copyright. The main issues in the
judicial review were whether the dealing for preview purposes was
"research" and whether the dealing was fair.
On the application for judicial review, SOCAN argued before the
court that the term "research" applied to activities
involving investigation, systematic research, critical analysis,
scientific inquiry, and factual discoveries arising and being
carried out in a formal setting. It submitted that previews over
the Internet have none of the characteristics required to fall
within the concept of research.
The court rejected SOCAN's submission, noting that "the
word 'research' in Section 29 was not limited to
scientific, economic, or cultural endeavours." Further,
research could include an activity in which a "consumer is
searching for an object of copyright that he or she desires and is
attempting to locate, and wishes to ensure its authenticity and
quality before obtaining it." The court agreed with the board
that "Listening to previews assists in this
investigation," and that the streaming of the previews was
research for a fair-dealing purpose.
The court found that the board had not erred in its approach to
determining whether the dealings were fair. The board had analyzed
the six factors adopted by the Supreme Court in CCH v.
Law Society of Upper Canada: the purpose, the character
and the amount of the dealing; alternatives to the dealing; the
nature of the work; and the effect of the dealing on the work. In
assessing the amount-of-the-dealing factor, the board considered
the length of each preview in proportion to the length of the
On the judicial review application, SOCAN argued that the amount
of the dealing and the fairness of the dealings should have been
determined based on the aggregate number of users and previews, as
well as the resulting hours of uncompensated music. The court
decided that SOCAN's "yardstick" raised its own
questions, including whether the yardstick was meant to replace the
board's measure or simply inform the analysis of the third
factor, and what weight it should be given. The court concluded
that "without an enlightened debate on these questions, and
given the fragmentary nature of the available information, it would
be wiser to leave this issue for another day."
McCarthy Tétrault Notes
In two US decisions, the courts rejected the fair-use defence
for online previews. In United States v. American
Society of Composers, Authors and Publishers(In re
AT&T Wireless), the District Court for the South District
of New York held that it was not fair use to offer previews of
ringtones to potential purchasers. In Video Pipeline v.
Buena Vista Home Entertainment Inc., the Court of Appeals
for the Third Circuit held that Video Pipeline was not likely to
succeed in raising a fair-use defence when it provided two-minute
excerpts from feature films for use as previews on Internet retail
websites. Neither of these cases was referred to by the Canadian
court in the Tariff 22.A judicial review./p>
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A recent Saskatchewan Court of Queen's Bench decision allowed a court-appointed receiver to sell and transfer intellectual property rights free and clear of encumbrances, finding that a license to use improvements of an invention was a contractual interest and not a property interest.
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