Canada: Pursuing The Balance In Copyright

Last Updated: July 18 2012
Article by Martin P.J. Kratz

An earlier version of this article was published by SLAW.

One of the most important recent cases of the Supreme Court of Canada in the field of copyright law has been CCH Canadian Ltd. v. Law Society of Upper Canada, [2004] 1 S.C.R. 339, in which the Court breathed real meaning into the fair dealing exception, now called a user's right. CCH was preceded by Théberge v. Galerie d'Art du Petit Champlain inc., [2002] 2 S.C.R. 336, where the Supreme Court of Canada explained that copyright law provides a balance between creators and users, namely: "the purpose of copyright law was to balance the public interest in promoting the encouragement and dissemination of works of the arts and intellect and obtaining a just reward for the creator". CCH took that a step further and defined the fair dealing user's right.

The Supreme Court has continued to pursue this balanced approach to the law and in five copyright judgments provided additional substance to the fair dealing right and a richer understanding of how to address the copyright system. The decisions deepen the understanding of the fair dealing user's right, the communication right in a digital context and one of the decisions clarifies the role of a sound recording in a cinematographic work.

In Alberta (Education) v. Canadian Copyright Licensing Agency (Access Copyright), 2012 SCC 37, the Supreme Court was addressing the issue of whether teachers making multiple copies of excerpts of textbooks and other works for their student's instruction came within the fair dealing exception. The Court observed that fair dealing is a "user's right", and the relevant perspective when considering whether the dealing is for an allowable purpose under the first stage of CCH is that of the user.

Applying the two-step test for fair dealing under CCH, there was no dispute that the first step of the test set out in CCH was met and that the dealing (the photocopying) was for the permitted purpose of research or private study. The issue was the assessment of the teacher's conduct in acting on their own initiative and making copies for the students and whether that conduct met the fairness test. The Court reviewed a number of fairness factors: the purpose, character, and amount of the dealing; the existence of any alternatives to the dealing; the nature of the work; and the effect of the dealing on the work.

In these facts the Court found that there was no separate purpose of the teacher nor can teachers be characterized as having a separate purpose of "instruction"; they are there to facilitate the students' research and private study. The fact that some copies were provided on request and others were not did not change the significance of those copies for students engaged in research and private study.

Of interest, the Court also noted that the word "private" in "private study" does not require users to view copyrighted works in isolation. Instead what is important is not the place of study but the concept of studying.

Also of interest is that in Bill C-11 education joins research and private study among the permitted purposes of the fair dealing right. As a result, it appears that the argument of a separate instructional purpose would appear to be moot in a post C-11 world.

In Society of Composers, Authors and Music Publishers of Canada v. Bell Canada, 2012 SCC 36, the court looked at the research purpose of the fair dealing right in the context of online music service providers giving customers the ability to listen to free previews of musical works prior to purchase of musical works. A preview was noted to be a 30 – 90 second extract from the work streamed (that is, providing only a temporary copy) that the listener could hear. The online music vendors noted that the previews help users decide whether to purchase a permanent download of the work.

The Court applied CCH's two-step process to review applicability of the fair dealing right noting that the purpose must be assessed from the perspective of the user. "Research" is not limited to making creative works as dissemination of works is also one of the Copyright Act's purposes. Dissemination either, with or without creativity, is in the public interest. The Court noted that consumers used the previews for the purpose of conducting research to identify which music to purchase, purchases which trigger dissemination of musical works and compensation for their creators, both of which are outcomes the Copyright Act seeks to encourage. As a result such conduct came within the research purpose.

In its assessment of the fairness of the dealing, the Court noted that there were reasonable safeguards in place to ensure that the users' dealing in previews were being used for this purpose: the previews were streamed, short, often of lesser quality, and no permanent copy was made. The Court also noted that listening to a preview probably is the most practical, most economical and safest way for users to ensure that they purchase what they wish and that the effect of previews was to increase the sale and therefore the dissemination of copyrighted musical works (generating remuneration to their creators) – it cannot be said that they have a negative impact on the work. As a result such dealing was found to be fair.

In Entertainment Software Association v. Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 34, at issue was the communication right in s. 3(1)(f ) of the Copyright Act in the context of downloads. Video game producers and distributors sought clarity as to whether their offer of downloads of video games, which contained musical works, from the Internet was subject to payment of fees for the mere downloading as a communication to the public by telecommunication. The vendors had already paid the copyright owners for the right to reproduce the musical works in the game. The Court noted that there is no practical difference between buying a durable copy of the work in a store, receiving a copy in the mail, or downloading a copy using the Internet. The Court interpreted the Copyright Act to avoid imposing an additional layer of protections and fees solely based on the method of delivery of a work to the end user. The Court noted that the Internet should be addressed in a technologically neutral manner and therefore that the traditional balance in copyright should be preserved in the digital environment.

The Court noted that the right to "communicate" is historically connected to the right to perform a work and not the right to reproduce permanent copies of the work. Therefore, the fundamental nature of the communications right is concerned with performance based activities. As a result the downloading was not a communication.

In Rogers Communications Inc. v. Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 35, the Supreme Court further advanced the understanding concerning the communication right in s. 3(1)(f) of the Copyright Act in the context of streaming. Online music service providers that offer downloads and on-demand streaming music (via a data stream resulting in a temporary copy) sought clarity on whether streaming of files from the Internet triggered by individual users constitutes communication "to the public" of the musical works contained therein.

It had previously been decided that a transmission of a single copy of a work to a single individual (such as by fax or point to point email) is not a communication to the public within the meaning of s. 3(1)(f) of the Copyright Act.

The Court found that a communication is not restricted to a purely non-interactive context. The right to communicate to the public is historically linked to traditional media that operated on broadcasting, or "push", model. Hence the multiple streaming was considered to be a communication to the public.

In Re: Sound v. Motion Picture Theatre Associations of Canada, 2012 SCC 38, the Supreme Court addressed the issue of the entitled to remuneration under a tariff under s. 19, applicable to "sound recording", of performers and makers of sound recordings for the performance in public or the communication to the public by telecommunication of their published sound recordings in the context of cinematographic works (e.g., motion pictures). Under the Copyright Act the definition of "sound recording" excludes soundtracks of cinematographic works.

Re: Sound argued that the purpose of the exclusion was to combine rights in the visual features of a cinematographic production with rights in the audio features of the same cinematographic production, and to protect those rights in a new work defined as a "cinematographic work".

The Court found that a pre-existing sound recording that is part of a soundtrack cannot be the subject of a tariff when the soundtrack accompanies the cinematographic work.

Businesses should review their practices in light of the developing law of fair dealing and the clarification of the communication right in the context of downloading and streaming.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Martin P.J. Kratz
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