Copyright Board Breaks New Ground On Internet Issues

A long awaited decision by the Copyright Board of Canada concerning the scope of copyright protection for musical works communicated over the Internet was released on October 27, 1999. The decision brings to a close the first phase of ongoing proceedings triggered by the 1995 filing with the Board of a tariff proposed by the Society of Composers, Authors and Music Publishers of Canada (SOCAN). SOCAN represents thousands of Canadian composers, authors and music publishers and otherwise controls and administers the performing rights in the world repertoire of music. Musical works have been used increasingly in recent years as part of Internet transmissions received by members of the public who have the necessary computer hardware and software to receive and listen to music made available on the Internet. These musical works are posted on various websites on the Internet with the intention that they be available for transmission to any member of the public who requests them. SOCAN’s proposed tariff ("Tariff 22") was intended to establish the compensation payable to SOCAN for such Internet uses of its works.

Access to the Internet and to music and other content on servers is provided to members of the public by various Internet service providers ("ISPs"). SOCAN’s position before the Board was that the only practical way of administering its performing rights in musical works used on the Internet was to license and collect the royalties from those ISPs which provide members of the public with access to the Internet and to the content on the websites, rather than the multitude of individual websites on which musical works might be posted. The tariff proposal was opposed by several major players in the Internet industry, including the Canadian Association of Internet Providers, the Canadian Cable Television Association and AT&T Canada.

The proceedings leading to the Board’s decision of October 27, 1999 were intended to deal with preliminary jurisdictional issues for determining whether or not there is a statutory basis for SOCAN’s proposed tariff. Generally, the Board’s task was to determine if section 3(1)(f) of the Copyright Act, which gives copyright owners the right to communicate their works to the public by telecommunication, was applicable in the particular context of the Internet. After an eleven day oral hearing and the filing of written submissions by the parties, the Board concluded, among other things, that:

a. Internet transmissions are communications by telecommunication within the meaning of the Act.

b. Communications intended to be received by members of the public in individual private settings are communications to the public. Similarly, communications intended only for a segment of the public (whether it be through e-mail, to a newsgroup, a bulletin board service, a service offered on a subscription basis or of a communication over a network for which access is restricted) are also communications to the public, as long as the transmission in question occurs outside a purely domestic setting.

c. A communication need not be instantaneous or simultaneous to be a communication to the public.

d. A work is communicated not when it is made available, but when it is transmitted (i.e., each time a member of the public uses a browser to access the work from the source computer), at the time the work is transmitted (whether or not it is played or viewed upon receipt, is stored for use at a later date or never used at all). A single transmission is sufficient to create liability.

e. When a work is transmitted, it is the person who posted it (usually the content provider) who communicates it.

f. Generally, by virtue of section 2.4(1)(b) of the Act, entities acting as Internet intermediaries such as ISPs do not communicate works. However, such entities will not be entitled to claim the benefit of section 2.4(1)(b) if, as a result of business relationships or other factors, they do not limit themselves to acting as mere intermediaries (e.g., by posting content, associating themselves with others to offer content, moderating newsgroups, etc.).

g. To occur in Canada, a communication must originate from a server located in Canada on which content has been posted.

The Board thus concluded that where the role of an ISP or other Internet intermediary is limited to providing the tools necessary for a transmission to occur, the only person liable for communicating a work as part of that transmission is the person who posted it. ISPs may become liable as well in circumstances where their role is not so limited. However, liability for content providers or ISPs will arise only where the communication in question originates from a server located in Canada.

While the Board’s findings fell short of the result sought by SOCAN, the decision confirmed that a statutory basis does exist for Tariff 22 and that the Board has jurisdiction to proceed to the next phase of the proceedings in which it will address issues relating to the structure of the tariff and the quantum of royalties to which SOCAN will be entitled. However, that phase of the Board’s proceedings may well be delayed in light of Federal Court applications filed by SOCAN and Time Warner Inc. seeking judicial review of the Board’s decision.