In Canadian Broadcasting Corp. v. SODRAC 2003
Inc.,1 once again the Supreme Court has had to
consider an appeal from a decision of the Copyright Board. The
basic question this time was whether the Copyright Board ought to
have imposed royalty fees on the CBC for producing incidental
copies that arise as a technical part of the digital broadcasting
The majority, citing technological neutrality and balance,
upheld the decision of the Copyright Board on this point. The
minority, also citing technological neutrality and balance, would
have reversed the decision of the Copyright Board and held that no
royalties were to be paid for such incidental copies.
Separate license required?
There could be no question that copies were being made. The
questions before the court were whether they were incidental to the
broadcasting (for which royalties were already being paid to the
performance rights collective SOCAN) or a separate reproduction for
which additional royalties should be paid to the reproduction
rights collective SODRAC and, if royalties were required, the
amount of such royalties.
The majority held that correctness was the standard of review
for the question of whether incidental copying was an infringement,
but reasonableness was the standard of review for the valuation
A win-loss outcome
In the end SODRAC won by virtue of the conclusion that such use
required payment but potentially lost on the question of the amount
of such payment. The majority held that the Copyright Board had
failed to consider the correct application of technological
neutrality in arriving at the royalty amount and referred the
matter back to the board for further consideration.
The case demonstrates yet again the difficulty of applying a
technological neutrality test: both on the questions of
infringement and on valuation. The court split on both decisions.
On infringement the majority said the incidental reproduction was a
fundamentally different reproduction than the reproduction for
broadcast and that the fact it was done for technical reasons did
not change the requirement for a license. On the other hand, the
minority held that technological neutrality required that there be
no requirement for a license where the copying was part of the same
functional task of broadcasting.
On the amount of the royalty, the majority held that neutrality
required that account be taken of the value that the reproductions
of the copyright-protected work contribute in the digital as
compared to the analog technology, and of the relative
contributions of the incidental reproductions as well as the
user's investment and risk in providing the new technology.
On the other hand, the minority held — as with the
valuation point — that the focus should be on the functional
result created by the technology, not on the value created by
improvements to the technology developed by the user.
In the end this saga is far from over as the Copyright Board
will have to review its rate-setting decision again (possibly with
new hearings?) in an effort to apply the Supreme Court's
directives. This will further delay the establishment of a rate on
a matter that has been pending since 2012 for the license period
1. Canadian Broadcasting Corp. v. SODRAC 2003
Inc., 2015 SCC 57
Norton Rose Fulbright Canada LLP
Norton Rose Fulbright is a global legal practice. We provide
the world's pre-eminent corporations and financial institutions
with a full business law service. We have more than 3800 lawyers
based in over 50 cities across Europe, the United States, Canada,
Latin America, Asia, Australia, Africa, the Middle East and Central
Recognized for our industry focus, we are strong across all
the key industry sectors: financial institutions; energy;
infrastructure, mining and commodities; transport; technology and
innovation; and life sciences and healthcare.
Wherever we are, we operate in accordance with our global
business principles of quality, unity and integrity. We aim to
provide the highest possible standard of legal service in each of
our offices and to maintain that level of quality at every point of
Norton Rose Fulbright LLP, Norton Rose Fulbright Australia,
Norton Rose Fulbright Canada LLP, Norton Rose Fulbright South
Africa (incorporated as Deneys Reitz Inc) and Fulbright &
Jaworski LLP, each of which is a separate legal entity, are members
('the Norton Rose Fulbright members') of Norton Rose
Fulbright Verein, a Swiss Verein. Norton Rose Fulbright Verein
helps coordinate the activities of the Norton Rose Fulbright
members but does not itself provide legal services to
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 Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
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.
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).