Canada: YouTube, Facebook, Netflix Liable To Pay For Music In Canada Rules Copyright Board

On Friday, the Copyright Board released a decision and certified two SOCAN tariffs, Tariffs 22.D.1 (Internet – Online Audiovisual Services) and 22.D.2 (Internet – User-Generated Content). The years covered by the tariffs are 2007-2013.

The tariffs were certified based on agreements reached between SOCAN and objectors. Between the objectors and other entities which filed submissions, the heavyweights affected by the tariffs participated including Apple, Yahoo!, YouTube,  Netflix, Facebook, Cineplex, the members of the Canadian Association of Broadcasters (CAB), and the Canadian ISPS Rogers, Bell, and Shaw.

The decision of the Board is important. Its significance extends to both the issues its reasons expressly addressed as well as to those issues which its reasons are implicitly based on. Some of the important findings are summarized below.

Principle of technological neutrality

Netflix argued that it was not liable to pay royalties on free trials of its popular video service. It contended, firstly, that the principle of technological neutrality should be applied to the construction of the communication to the public right to make it inapplicable to such uses. It relied on the decision of the Supreme Court in the ESA case. That reliance was held by the Board to be inapposite.

In Canadian Broadcasting Corporation v. Sodrac 2003 Inc., 2014 FCA 84 the Federal Court of Appeal suggested that Supreme Court's majority reasons in ESA incorporate at least three views of technological neutrality:

a) Technological neutrality is media neutrality. Media neutrality is a statutory prescription arising from the opening words of section 3 of the Act, which protects the production or reproduction of works "in any material form whatever". Media neutrality was recognized by the Supreme Court in Robertson v. Thomson Corp., 2006 SCC 43 (CanLII), 2006 SCC 43, [2006] 2 S.C.R. 363 (Robertson), a case involving copyright in content originally published in a newspaper and then republished online.

b) Technological neutrality is a principle of statutory interpretation according to which, absent evidence of a contrary Parliamentary intention, the Act is to be interpreted so as to avoid imposing royalties according to the method of delivery of a protected work.

c) Technological neutrality is determined by functional equivalence so that if two technologically distinct operations produce the same result (delivering a copy of a work to the consumer), the incidence of royalties should be the same in both cases.

On the facts before the Board, neither possible interpretation was applicable. According to the Board:

The principle of technological neutrality is that, since only the reproduction right is triggered when a CD is sold in a store, only the reproduction right should be triggered when a digital album is sold online. The CD is an alternative technology to the digital download. There is no alternative-technology equivalent to a Netflix free trial. Video stores never offered a free month's membership with the right to rent as many videos as the customer wanted for no additional charge. Thus, there is no issue with technological neutrality.

Fair dealing

Netflix also wanted the Board to find that it's free trials are fair dealing in the same way that the Board and the Supreme Court in SOCAN v Bell Canada, [2012] 2 SCR 326 found that free previews of musical works offered by a music download service like iTunes can be a fair dealing. The Board rejected the contention distinguishing between free previews of musical works and free trials of an audiovisual service. It also rejected the argument for other reasons related to the certification process and the evidence before it.

First, the analogy between free previews and free trials is weak. In a free preview, the customer can hear a portion of a musical work in a degraded format. In a free trial, the customer can hear complete musical works, to the extent that such works are fixed in the audiovisual work being watched.

Second, it is not altogether clear that Netflix is the only provider that offers free trials. When the Board was examining the free previews offered by iTunes, it was possible to argue that iTunes was the dominant provider of permanent downloads. Thus, in examining the practices of iTunes, the Board was essentially examining the practices of the permanent-download industry. However, in the case of Netflix, it is not clear that they dominate the market for videos. Without the argument of market dominance, an analysis of Netflix's policy of free trials would necessarily be incomplete with respect to the overall video industry.

Third, and equally importantly, we do not have the evidentiary base with which to make that decision. While we could delay this decision for several more months during which time we would be collecting evidence from the parties on this issue, the fact that Netflix declined to participate in the process for many months is sufficient reason for us to decline to do so. If Netflix now wants to argue that it does not owe anything for its free trials, the appropriate forum in which to do so is not the Board.

Liability of service providers for communicating works

The Board only has authority to certify a tariff if there is a legal basis to do so. By certifying the tariffs the Board must have been of the opinion that service providers such as YouTube and Facebook which each provide online audiovisual and user generate content services communicate musical works to the public in the course of providing such services. In a prior decision in which the Board declined to certify tariffs for these services because of lack of evidence, it found that tariffs for them were justified and suggested that liability was joint and several between the service providers and users of the services. Since the terms covered by the tariffs include periods after the Copyright Modernization Act was proclaimed into force in November 2012, it must also be assumed that the Board was of the opinion that none of the amendments to the Copyright Act diminished the liability of service providers to SOCAN for communicating musical works to the public.

Liability of service providers for music downloads

In the ESA case, the Supreme Court ruled that the communication to the public right, as it then was, did not include the transmission of copies of music downloads to users as part of a music download service. This prompted the Board in its recent decision to observe that this "meant that SOCAN no longer had the right to collect royalties for permanent downloads and limited downloads". When the Copyright Act was amended by the Copyright Modernization Act, the communication to the public right for works was deemed to include the new right of making works available to the public. This raised the question, now before the Board in a separate proceeding, as to whether after November 2012 the communication to the public right includes the transmission or other making available of downloads of musical works to the public.

Despite all of this, the Board certified the online audiovisual service tariff defining the term "online audiovisual service" "as a service that delivers streams or downloads of audiovisual works to end users, other than a service that offers only streams in which the file is selected by the service and can only be listened to at a time chosen by the service and for which no advance play list is published". Since the Board's tariffs affect all users who engage in the activities covered by the tariff, it may affect service providers that exclusively offer only downloads of music audiovisual files.

The Board did not explain the legal basis for certifying a tariff that included royalties for a download audiovisual service prior to the Copyright Modernization Act coming into force. Was there something about these services that distinguish them from the download services considered by the Supreme Court in the ESA case? The Board doesn't say. The Board had a further legal basis for certifying such a tariff after the communication right was amended to include the right of making available (November 2012 and 2013). It rests on the legal premise that the amendments to the Act had the effect of overruling the decision of the Supreme Court in the ESA case.

First published on

To view the original article please click here.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.