Canadian Broadcasting Corporation v. Sodrac 2003 Inc.

Canadian Broadcasting Corporation v. Sodrac 2003 Inc.
Court (s) Database
Federal Court of Appeal Decisions
Date
2014-03-31
Neutral citation
2014 FCA 84
File numbers
A-516-12, A-527-12, A-63-13
Notes
Reported Decision
Decision Content
Date: 20140331
Dockets:
A-516-12
A-527-12
A-63-13
Citation: 2014 FCA 84
CORAM:
NOËL J.A.
PELLETIER J.A.
TRUDEL J.A.
Docket:
A-516-12
BETWEEN:
CANADIAN BROADCASTING CORPORATION/
SOCIÉTÉ RADIO-CANADA
Applicant
and
SODRAC 2003 INC.
and
SOCIETY FOR REPRODUCTION RIGHTS OF AUTHORS, COMPOSERS AND PUBLISHERS IN CANADA (SODRAC) INC.
Respondents
Docket:
A-527-12
AND BETWEEN:
ASTRAL MEDIA INC.
Applicant
and
SOCIETY FOR REPRODUCTION RIGHTS OF AUTHORS, COMPOSERS AND PUBLISHERS IN CANADA (SODRAC) INC.
Respondent
Docket:
A-63-13
AND BETWEEN:
CANADIAN BROADCASTING CORPORATION/
SOCIÉTÉ RADIO-CANADA
Applicant
and
SODRAC 2003 INC.
and
SOCIETY FOR REPRODUCTION RIGHTS OF AUTHORS, COMPOSERS AND PUBLISHERS IN CANADA (SODRAC) INC.
Respondents
Heard at Montréal, Quebec, on October 1, 2013.
Judgment delivered at Ottawa, Ontario, on March 31, 2014.
REASONS FOR JUDGMENT BY: PELLETIER J.A.
CONCURRED IN BY:
NOËL J.A.
TRUDEL J.A.
Date: 20140331
Dockets:
A-516-12
A-527-12
A-63-13
Citation: 2014 FCA 84
CORAM:
NOËL J.A.
PELLETIER J.A.
TRUDEL J.A.
Docket:
A-516-12
BETWEEN:
CANADIAN BROADCASTING CORPORATION/
SOCIÉTÉ RADIO-CANADA
Applicant
and
SODRAC 2003 INC.
and
SOCIETY FOR REPRODUCTION RIGHTS OF AUTHORS, COMPOSERS AND PUBLISHERS IN CANADA (SODRAC) INC.
Respondents
Docket:
A-527-12
AND BETWEEN:
ASTRAL MEDIA INC.
Applicant
and
SOCIETY FOR REPRODUCTION RIGHTS OF AUTHORS, COMPOSERS AND PUBLISHERS IN CANADA (SODRAC) INC.
Respondent
Docket:
A-63-13
AND BETWEEN:
CANADIAN BROADCASTING CORPORATION/
SOCIÉTÉ RADIO-CANADA
Applicant
and
SODRAC 2003 INC.
and
SOCIETY FOR REPRODUCTION RIGHTS OF AUTHORS, COMPOSERS AND PUBLISHERS IN CANADA (SODRAC) INC.
Respondents
REASONS FOR JUDGMENT
PELLETIER J.A.
[1] In a decision dated November 2, 2012 (the Decision), the Copyright Board (the Board) exercised its mandate under section 70.2 of the Copyright Act, R.S.C. 1985 c. C-42 (the Act) to settle the terms of a licence to be granted to two broadcasters by a collective society which administers reproduction rights. The terms of the licence reflect the Board’s view that royalties were payable with respect to ephemeral copies of works made by the broadcasters in the normal course of their production or broadcasting activities. Ephemeral copies, as will be seen, are copies or reproductions that exist only to facilitate a technological operation by which audiovisual work is created or broadcast.
[2] This aspect of the Board’s decision rests on the Supreme Court of Canada’s decision in Bishop v. Stevens, [1990] 2 S.C.R. 46, in which the Court held that ephemeral recordings of a performance of a work, made solely for the purpose of facilitating the broadcast of that performance, were, if unauthorized, an infringement of the copyright holder’s rights. In this application for judicial review of the Board’s Decision, the broadcasters argue that Bishop v. Stevens must be read in the light of Entertainment Software Association v. Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 34, [2012] 2 S.C.R. 231, (ESA), a decision in which the Supreme Court affirmed the principle of technological neutrality in copyright matters. The result, in the applicants’ view, is that, today, ephemeral copies should no longer attract royalties.
[3] The Board’s decision raised other issues which will be discussed below but the question that dominated the hearing of this appeal was the treatment of ephemeral recordings in light of ESA.
[4] For the reasons that follow, I am of the view that Bishop v. Stevens continues to be good law.
THE DECISION UNDER REVIEW
[5] These reasons apply to three applications for judicial review. In file no. A-516-12, the Canadian Broadcasting Corporation/Société Radio Canada (CBC) seeks to set aside several terms of the 2008-2012 licence issued to it pursuant to the Decision. In file no. A-527-12, Astral Media Inc. (Astral) also seeks to set aside a number of the terms of the 2008-2012 licence issued to it pursuant to the Decision. Lastly, file no. A-63-13 involves another application for judicial review by CBC, this time with respect to the Board’s January 16, 2013 decision extending the 2008-2012 licence to the 2012-2016 period on an interim basis pending a final determination of SODRAC’s section 70.2 with respect to that period. Both licences issued pursuant to the November 2, 2012 and the January 16, 2013 decisions are subject to a stay of execution pursuant to an order of this Court made February 28, 2013, pending the final determination of these applications for judicial review.
[6] These reasons deal with all three applications; a copy of them will be placed on each file. Judgment will issue separately in each file, on the terms provided in these reasons.
[7] The Society for Reproduction Rights of Authors, Composers and Publishers in Canada (Sodrac) Inc., and SODRAC 2003 Inc. (collectively SODRAC) are collective societies responsible for the administration of the reproduction rights on behalf of the holders of those rights.
[8] CBC is Canada’s public broadcaster. CBC’s mandate with respect to Canada’s French speaking population is discharged by the Société Radio-Canada (Radio-Canada) which, for many years, has produced and broadcast programs incorporating music by Québec artists. Since SODRAC represents the majority of Québec reproduction rights holders, Radio-Canada and SODRAC are well known to each other.
[9] Astral is a broadcaster specializing in specialty channels but unlike the CBC, it does not produce any of its own programming. It purchases audiovisual works for broadcast from producers, apparently on the understanding that these producers have obtained the necessary rights to allow it to broadcast the works without the payment of additional royalties
[10] This dispute arises out of a particular historical context. Following the decision in Bishop v. Stevens in 1990, SODRAC licensed broadcasters making use of its repertoire to make ephemeral copies for broadcasting purposes, and to incorporate works in its repertoire into their own productions. These licences also covered producers who were commissioned by these broadcasters to produce works containing SOCRAC material. Around 1998, SODRAC began requiring such producers o obtain their own licence, though these licences did not require the payment of royalties. Around 2006, SODRAC began requiring producers to pay for the right to incorporate works from its repertoire into their productions, even if the broadcaster commissioning the work was licensed by SODRAC.
[11] In 1992, CBC and SODRAC concluded an agreement that set the terms upon which CBC was authorized to use works from SODRAC’s repertoire on radio, on television and for certain ancillary purposes. This agreement was renewed from time to time but as SODRAC’s licensing practices changed, they were unable to come to an agreement on renewal. SODRAC invoked section 70.2 of the Act so as to seize the Board with the question. More or less at the same time, SODRAC also invoked section 70.2 of the Act in relation to Astral. The Board consolidated the hearing of these two matters.
[12] Section 70.2 of the Act provides for a form of arbitration in which parties who are unable to agree on the term of a licence can apply to the Board to fix those terms:
70.2 (1) Where a collective society and any person not otherwise authorized to do an act mentioned in section 3, 15, 18 or 21, as the case may be, in respect of the works, sound recordings or communication signals included in the collective society’s repertoire are unable to agree on the royalties to be paid for the right to do the act or on their related terms and conditions, either of them or a representative of either may, after giving notice to the other, apply to the Board to fix the royalties and their related terms and conditions.
70.2 (1) À défaut d’une entente sur les redevances, ou les modalités afférentes, relatives à une licence autorisant l’intéressé à accomplir tel des actes mentionnés aux articles 3, 15, 18 ou 21, selon le cas, la société de gestion ou l’intéressé, ou leurs représentants, peuvent, après en avoir avisé l’autre partie, demander à la Commission de fixer ces redevances ou modalités.
(2) The Board may fix the royalties and their related terms and conditions in respect of a licence during such period of not less than one year as the Board may specify and, as soon as practicable after rendering its decision, the Board shall send a copy thereof, together with the reasons therefor, to the collective society and the person concerned or that person’s representative.
(2) La Commission peut, selon les modalités, mais pour une période minimale d’un an, qu’elle arrête, fixer les redevances et les modalités afférentes relatives à la licence. Dès que possible après la fixation, elle en communique un double, accompagné des motifs de sa décision, à la société de gestion et à l’intéressé, ou au représentant de celui-ci.
[13] The heart of the dispute between CBC and Astral (collectively, the Broadcasters) on the one hand, and SODRAC, on the other, is SODRAC’s business model which the Broadcasters say is inconsistent with the prevailing industry model. The Broadcasters say that the normal practice in the industry is for the producer of an audiovisual work (television program, movie or other cinematographic work) to obtain a through-to-the-viewer licence from the rights holder.
[14] In its Decision, the Board described a through-to-the viewer licence as follows:
Producers sometimes secure a through-to-the-viewer licence. Such a licence authorizes all copies of a musical work made by the producer or others in the course of delivering the audiovisual work to the ultimate consumer in the intended market, be it television, cinema, DVD, Internet or other. A buy-out licence is a through-to-the-viewer licence in which royalties are set at a lump sum paid up front. Other through-to-the-viewer licences give the producer the option to extend the licence beyond a certain point in time, a certain territory or a certain market at pre-determined prices. When a producer exercises an option pursuant to a through-to-the-viewer licence, the related rights are cleared for downstream users as well as for the producer.
Decision at paragraph 15
[15] The Broadcasters emphasize that this type of licence is consistent with the producer’s intention in obtaining a licence, which is to create a product that can be marketed to broadcasters or exhibitors who can then exploit it commercially. The fact that the rights acquired under a through-to-the-viewer licence may be limited in time or place does not detract from the essential feature of such a licence, which is that the producer obtains or “clears” all necessary rights for downstream users, within the temporal or geographical limits of the licence.
[16] As against this model, SODRAC has adopted a layered approach to licensing in which each link in the distribution chain must acquire (and pay for) the right to make the copies required for its commercial purposes. It is reasonable to assume that SOCRAC’S position is designed to maximize revenue for the artists it represents.
[17] SODRAC’s change in strategy corresponds with the adoption of new technology that generally requires producers to make multiple copies of a musical work in order to incorporate it into an audiovisual work, a process known as synchronisation. At the same time, computerized digital content management systems and digital projection systems require broadcasters or exhibitors of an audiovisual work to make multiple copies of the work in order to broadcast or exhibit it. These copies, described earlier in these reasons as ephemeral copies, are known as incidental copies and were described as follows by the Board:
…Synchronization refers to the process of incorporating a musical work into an audiovisual work. Thus, a synchronization copy is any copy made in order to include the work into the final (master) copy of an audiovisual work. A post-synchronization copy of the music is made each time the audiovisual work itself is copied, for example to broadcast, deliver or distribute the audiovisual work.
An incidental copy is necessary or helpful to achieve an intended outcome but is not part of the outcome itself. A production-incidental copy is made in the process of producing and distributing an audiovisual work, either before or after the master copy is made: it is a form of synchronization copy. A broadcast-incidental copy is made to facilitate the broadcast of an audiovisual work or to preserve the work in the broadcaster’s archives, while a distribution-incidental copy is made for the purpose of readying or preserving the motion picture for distribution to the public: both are forms of post-synchronization copies.
Decision at paragraphs 11-12 (emphasis in the original)
[18] To round out this discussion of incidental copies, it is of interest to note that the evidence before the Board was that a producer will reproduce a musical work between 12 and 20 times in the course of the synchronization process leading to a finished master copy. Television broadcasters, using digital content management systems (which are now the industry standard), make multiple copies of an audiovisual work in the course of editing (for example, adjusting sound and colour balance), broadcasting and archiving the work. While the making of incidental copies is not a new phenomenon (see Bishop v. Stevens), it appears that technological advances may have increased the number of incidental copies made in the course of commercial operations. The Board says it did; the Broadcasters dispute this.
[19] With that background, I turn to the Board’s decision. After having laid out the historical and technological background summarized above, the Decision then set out a few general legal principles, the most relevant of which is the following:
Fourth, the Board cannot impose liability where the Act does not or remove liability where it exists. Consequently, the Board cannot decide who should pay, only what should be paid for which uses, and only to the extent that the envisaged use requires a licence.
Decision at paragraph 62
[20] This principle is a partial answer to the Broadcaster’s argument with respect to whether incidental copies should attract royalties. In the Board’s view, liability to pay royalties is imposed by the Act and is based upon use of the protected material. As a result, the Board cannot relieve a user of protected material from the financial consequences of that use.
[21] The Board then went on to consider what it called “contextual legal principles”. Under this heading, the Board engaged in an examination of the history and current state of SODRAC’s licensing practices. It acknowledged that the use of through-to-the viewer licenses in some markets by some rights holders was relevant but not determinative. The focus of the inquiry was on SODRAC’s practices which, to the extent that they were both consistent and significant in the relevant market, could not be ignored.
[22] The Board’s review of the evidence, including SODRAC’s licensing practices, led it to conclude that SODRAC had issued few, if any, through-to-the-viewer licences. To the extent that SODRAC had issued licences granting the licencee the right to authorize others to reproduce protected works, that right generally resided with the broadcaster not with the producer. So it was that CBC’s licence from SODRAC covered synchronization in audiovisual works commissioned by CBC from independent producers. Under such licences, producers did not acquire the right to authorize anyone “downstream” in the distribution chain to reproduce a protected work.
[23] As a result of its review of the evidence, the Board concluded that the record before it was unambiguous. “In the most relevant market, the province of Québec, through-to-the-viewer licensing exists but is not the norm”: see Decision at paragraph 78. This finding is significant because, to the extent that the Board sets royalties and licence fees on the basis of the economic value of the rights involved, the definition of the market for those rights is a relevant consideration.
[24] The Board next embarked on an analysis of the economic value of reproduction rights in the hands of broadcasters and producers, an analysis that proceeded on the basis of two fundamental propositions:
a) The copy-dependent technologies adopted by producers and broadcasters add value to their businesses, by allowing them to remain competitive, even if they do not generate direct profits. Since part of this value arises from the use of additional copies, some of the benefits flowing from those copies should be reflected in the remuneration paid for the additional copies.
b) The Board cannot, under the umbrella of a section 70.2 arbitration between two parties, dictate how either of the parties should conduct their business generally, or how they should deal with third parties such as producers. In other words, it is not for the Board to force SODRAC to issue through-to-the-viewer licenses or to establish through-to-the-viewer licences as a standard arrangement.
[25] After establishing these principles, the Board’s decision went on at some length in setting the financial terms of the licences to the CBC and to Astral. After making allowance for the fact that SODRAC did not represent all of the rights holders for music incorporated into the Broadcasters’ offerings, the Board then addressed the quantification of the fees to be paid by the latter under various headings. The Board set the licence fees for broadcast-incidental copies in radio and television as well as the fees payable by CBC with respect to synchronization licences. Finally, the Board dealt with licence fees payable for internet TV, sales of programs to consumers for private use (DVDs and downloads), and fees for licensing of CBC programs to third parties.
[26] The Broadcasters’ principal argument before us was that the analysis adopted by the Board flew in the face of the principle of technological neutrality established by the Supreme Court in ESA. As a result, in order to simplify the analysis, I propose to deal with the issue of technological neutrality at this point, deferring the analysis of the other arguments made by the Broadcasters until later in these reasons.
ANALYSIS
[27] The Board is unusual among specialized administrative tribunals in that its decisions on question of law are reviewable on the standard of correctness: see Rogers Communications Inc. v. Society of Composers, Author sand Music Publishers of Canada, 2012 SCC 35, [2012] 2 S.C.R. 283 at paragraphs 10-15. Questions of fact are only reviewable if they are "made in a perverse or capricious manner or without regard for the material before it [the tribunal]": see section 18.1(4)(d) of the Federal Courts Act, R.S.C. 1985, c. F-7. In Canada (Citizenship and Immigration) v. Khosa, 2009 SCC 12, [2009] 1 S.C.R. 339 (Khosa), the Supreme Court of Canada described this provision as providing “legislative precision to the reasonableness standard of review of factual issues falling under the Federal Courts Act”: Khosa, at paragraph 46.
[28] Earlier in these reasons, I set out two fundamental propositions that inform the Board’s reasoning: see paragraph 25. The first is that, if technological advances require the making of more copies of a musical work in order to get an audiovisual work that incorporates it to market, those additional copies add value to the enterprise. As a result, they attract additional royalties, not necessarily on a per-copy basis but on the basis of the additional value generated by those copies. Simply put, more copies mean more value and thus, more royalties.
[29] The Broadcasters challenge this proposition on two interrelated but distinct grounds. First, they say that copy-dependent technology does not add value to an enterprise and as a result, there is no additional value to share with artists who, incidentally, bear none of the costs of acquiring and maintaining the new technology. This is essentially an economic argument, on which the Board heard extensive evidence and on which it came to a conclusion for which there is an evidentiary foundation. As a result, this Court is not in a position to interfere with the Board’s conclusion on the economic justification for its conclusion.
[30] The Broadcasters’ second argument is a legal one: the Board’s decision fails to give effect to the principle of technological neutrality articulated by the Supreme Court in ESA. The Broadcasters concede, as they must, that the incorporation of a musical work into an audiovisual work (synchronization) is a reproduction that attracts royalties. However, they go on to argue that copies of the work that are made purely to meet the requirements of the technological systems used by producers and broadcasters ought not to attract royalties. Changes in technology should not automatically result in changes in royalties. Otherwise, intellectual property rights become a drag on technological innovation and efficiency.
[31] The Board’s reasoning is grounded in the Supreme Court’s decision in Bishop v. Stevens, a case in which the Supreme Court held that each of the rights enumerated in subsection 3(1) of the Act was a separate right reserved to the owner of the copyright, whose use by another attracted liability for the payment of royalties. Section 3(1) of the Act is reproduced below for ease of reference:
3. (1) For the purposes of this Act, “copyright”, in relation to a work, means the sole right to produce or reproduce the work or any substantial part thereof in any material form whatever, to perform the work or any substantial part thereof in public or, if the work is unpublished, to publish the work or any substantial part thereof, and includes the sole right
(a) to produce, reproduce, perform or publish any translation of the work,
…
(d) in the case of a literary, dramatic or musical work, to make any sound recording, cinematograph film or other contrivance by means of which the work may be mechanically reproduced or performed,
(e) in the case of any literary, dramatic, musical or artistic work, to reproduce, adapt and publicly present the work as a cinematographic work,
(f) in the case of any literary, dramatic, musical or artistic work, to communicate the work to the public by telecommunication,
…
and to authorize any such acts.
3. (1) Le droit d’auteur sur l’œuvre comporte le droit exclusif de produire ou reproduire la totalité ou une partie importante de l’œuvre, sous une forme matérielle quelconque, d’en exécuter ou d’en représenter la totalité ou une partie importante en public et, si l’œuvre n’est pas publiée, d’en publier la totalité ou une partie importante; ce droit comporte, en outre, le droit exclusif :
a) de produire, reproduire, représenter ou publier une traduction de l’œuvre;
…
d) s’il s’agit d’une œuvre littéraire, dramatique ou musicale, d’en faire un enregistrement sonore, film cinématographique ou autre support, à l’aide desquels l’œuvre peut être reproduite, représentée ou exécutée mécaniquement;
e) s’il s’agit d’une œuvre littéraire, dramatique, musicale ou artistique, de reproduire, d’adapter et de présenter publiquement l’œuvre en tant qu’œuvre cinématographique;
f) de communiquer au public, par télécommunication, une œuvre littéraire, dramatique, musicale ou artistique;
…
Est inclus dans la présente définition le droit exclusif d’autoriser ces actes.
[32] More specifically, Bishop v. Stevens decided that ephemeral recordings made solely for the purpose of facilitating the broadcast of a work were caught by paragraph 3(1)(d) of the Act and were not implied in the right to broadcast a work: see Bishop v. Stevens at paragraphs 22-25. To that extent, Bishop v. Stevens is directly on point and, unless it has been overturned or disavowed by the Supreme Court, it determines the outcome of this branch of the applications for judicial review.
[33] The Broadcasters say that Bishop v. Stevens has been overtaken by ESA.
[34] The issue in ESA was whether a download of a game containing music is a communication of the musical work to the public by telecommunication, one of the rights reserved exclusively to the copyright holder by the Act: see paragraph 3(1)(f). If it is, then the publishers of the game, who had already paid for the right to reproduce the music incorporated in the game, were liable to pay royalties with respect to the download (the communication to the public by telecommunication). As a result, recourse to a technologically advanced method of delivery would create liability for additional royalties that were not paid or payable when the game was sold on a traditional physical medium, such as a CD-ROM.
[35] In its decision, reported at (2007) 61 C.P.R. (4th) 353, the Board found that the download of a game containing music was a communication of the musical work to the public by telecommunication, a decision that was confirmed by this Court at 2010 FCA 221. The majority of the Supreme Court reversed this Court and, in the course of doing so, affirmed the principle of technological neutrality.
[36] The Supreme Court began by articulating its view of the source and effect of technological neutrality:
In our view, the Board's conclusion that a separate, "communication" tariff applied to downloads of musical works violates the principle of technological neutrality, which requires that the Copyright Act apply equally between traditional and more technologically advanced forms of the same media: Robertson v. Thomson Corp., [2006] 2 S.C.R. 363, at paragraph 49. The principle of technological neutrality is reflected in s. 3(1) of the Act, which describes a right to produce or reproduce a work "in any material form whatever". In our view, there is no practical difference between buying a durable copy of the work in a store, receiving a copy in the mail, or downloading an identical copy using the Internet. The Internet is simply a technological taxi that delivers a durable copy of the same work to the end user.
ESA at paragraph 5 (my emphasis).
[37] A slightly different view of technological neutrality emerges from paragraph 9 of the majority’s reasons:
SOCAN has never been able to charge royalties for copies of video games stored on cartridges or discs, and bought in a store or shipped by mail. Yet it argues that identical copies of the games sold and delivered over the Internet are subject to both a fee for reproducing the work and a fee for communicating the work. The principle of technological neutrality requires that, absent evidence of Parliamentary intent to the contrary, we interpret the Copyright Act in a way that avoids imposing an additional layer of protections and fees based solely on the method of delivery of the work to the end user. To do otherwise would effectively impose a gratuitous cost for the use of more efficient, Internet-based technologies.
(My emphasis.)
[38] Finally, a third view of technological neutrality is found in paragraph 10 of the majority’s reasons:
The Board's misstep is clear from its definition of "download" as "a file containing data ... the user is meant to keep as his own" (paragraph 13). The Board recognized that downloading is a copying exercise that creates an exact, durable copy of the digital file on the user's computer, identical to copies purchased in stores or through the mail. Nevertheless, it concluded that delivering a copy through the Internet was subject to two fees - one for reproduction and one for communication - while delivering a copy through stores or mail was subject only to reproduction fees. In coming to this conclusion, the Board ignored the principle of technological neutrality.
(My emphasis.)
[39] A careful reading of these passages shows that the Supreme Court’s majority reasons 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, [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.
[40] In light of these different views of technological neutrality, it is difficult to know how one is to approach technological neutrality post-ESA. This is particularly true when one considers that in both Robertson and ESA the Court’s decision was reached following an analysis that did not rely on any of the possible variants of technological neutrality.
[41] In Robertson, the issue was whether the Globe and Mail infringed the copyright of freelance contributors when it contributed their work to electronic databases. The case was one of overlapping copyrights as the freelance contributors retained the copyright in their article while the Globe and Mail had the copyright in the newspaper as a whole, whether considered as a compilation or a collection: see Robertson, at paragraph 31. The majority in the Supreme Court held that the databases infringed the freelancer’s copyright because the databases did not involve a reproduction of the newspaper as such but of discrete elements such as articles, even though these were tagged with the name of the original publication, date of publication and other publication specific identifiers. The basis of the Supreme Court’s decision is that the database reproduced the freelance contributor’s, not the newspaper’s, originality. The result was that the inclusion of the article in the database was an infringement of the freelancer’s copyright and was not covered by the newspaper’s copyright.
[42] The decision in Robertson turned on the originality of the work being reproduced and not on the nature of the medium on which the articles were republished. While the Court’s conclusion was technologically neutral, in the sense that the medium on which reproduction occurred was not a relevant consideration, its decision provided no guidance as to how technological neutrality was to be achieved.
[43] Similarly, the majority decision in ESA was the result of an analysis of the legislative history of the Act and of the jurisprudence showing that communication to the public by telecommunication was historically an aspect of the performance right, and that this right did not include the delivery of a permanent copy of the work. Since the download did result in the creation of a permanent copy of the work on the downloader’s computer, it was not a performance and thus not a communication of the work to the public by telecommunication.
[44] The majority’s analysis did not rely on nor refer to any of the shades of technological neutrality that it discussed in the earlier part of its reasons. As a result, ESA, while restating the principle of technological neutrality in copyright law, provides no guidance as to how a court should apply that principle when faced with a copyright problem in which technological change is a material fact.
[45] Bishop v. Stevens was just such a case. In it, the broadcaster argued that the right to broadcast a performance necessarily included the right to make ephemeral recordings in support of the broadcasting activity. The broadcaster argued that pre-recording was virtually essential “to ensure the quality of broadcasts and to enable broadcasters to offer the same programming at convenient times across five different time zones”: see Bishop v. Stevens, at paragraph 23. This argument was rejected on the basis of the statutory distinction between the right to make a recording of a work and the right to perform that work.
[46] The Supreme Court’s reasoning in Bishop v. Stevens is worth repeating here as it foreshadows the arguments made in this case:
In sum, I am not convinced that there is any reason to depart from the literal meaning of s. 3(1)(d) and the introductory paragraph to s. 3(1) of the Act, which on their face, draw a distinction between the right to make a recording and the right to perform. Neither the wording of the Act, nor the object and purpose of the Act, nor practical necessity support an interpretation of these sections which would place ephemeral recordings within the introductory paragraph to s. 3(1) rather than in s. 3(1)(d). On the contrary, policy considerations suggest that if such a change is to be made to the Act, it should be made by the legislature, and not by a forced interpretation. I conclude that the right to broadcast a performance under s. 3(1)(d) of the Act does not include the right to make ephemeral recordings for the purpose of facilitating the broadcast.
Bishop v. Stevens, at paragraph 33
[47] This reasoning is taken up in the following passage from ESA:
40 SOCAN submits that the distinction between reproduction and performance rights in Bishop actually supports its view that downloading a musical work over the Internet can attract two tariffs. Since reproduction and performance-based rights are two separate, independent rights, copyright owners should be entitled to a separate fee under each right. This is based on the Court's reliance in Bishop, at p. 477, on a quote from Ash v. Hutchinson & Co. (Publishers), Ltd., [1936] 2 All E.R. 1496 (C.A.), at p. 1507, per Greene L.J.:
Under the Copyright Act, 1911 [on which the Canadian Act was based], ... the rights of the owner of copyright are set out. A number of acts are specified, the sole right to do which is conferred on the owner of the copyright. The right to do each of these acts is, in my judgment, a separate statutory right, and anyone who without the consent of the owner of the copyright does any of these acts commits a tort; if he does two of them, he commits two torts, and so on. [Emphasis added.]
41 In our view, the Court in Bishop merely used this quote to emphasize that the rights enumerated in s. 3(1) are distinct. Bishop does not stand for the proposition that a single activity (i.e., a download) can violate two separate rights at the same time. This is clear from the quote in Ash v. Hutchinson, which refers to "two acts". In Bishop, for example, there were two activities: 1) the making of an ephemeral copy of the musical work in order to affect a broadcast, and 2) the actual broadcast of the work itself. In this case, however, there is only one activity at issue: downloading a copy of a video game containing musical works.
ESA at paragraphs 40-41
[48] In my view, this passage reaffirms the fundamental distinction between reproduction and performance (communication to the public by telecommunication) that the Court articulated in Bishop v. Stevens. Nothing in this passage, or elsewhere in ESA, would authorize the Board to create a category of reproductions or copies which, by their association with broadcasting, would cease to be protected by the Act. ESA did not explicitly, or by necessary implication, overrule Bishop v. Stevens.
[49] As a result, I am unable to accept the Broadcasters’ argument that the comments about technological neutrality in ESA have changed the legal landscape to the point where the Board erred in finding that incidental copies are protected by copyright. The Broadcasters’ argument with respect to technological neutrality fails.
ADDITIONAL GROUNDS OF REVIEW
[50] The Broadcasters raise a number of other issues in their attack on the Board’s Decision. They can be summarized as follows:
1- The Board failed to carry out or to properly carry out its role as economic regulator by wrongly deciding a number of questions that arose before it in the course of its decision.
2- The Board exceeded its jurisdiction when it imposed a general licence on the Broadcasters notwithstanding the latter’s expressed preference for transaction-based licences if the Board ordered the payment of royalties for ephemeral reproductions.
3- The Board failed to consider a relevant factor when it refused to take into account the CBC’s ability to pay when fixing licence fees that were substantially more than those which CBC has paid historically.
I will now address each of these in turn.
1- The Board failed to carry out or to properly carry out its role as economic regulator by wrongly deciding a number of questions that arose before it in the course of its decision.
[51] This heading covers a number of distinct findings by the Board whose common denominator is their economic impact. Most of these findings relate to the exercise of the Board’s judgment in assessing the evidence put before it by the parties and in putting a value on reproduction rights in different contexts, such as radio, television, internet, and film and DVD distribution.
[52] Such questions are reviewable on the standard of reasonableness since they inevitably involve the weight to be given to the evidence heard by the Board and the conclusions to be drawn from that evidence. Reasonableness, in this context, means “within the range of acceptable outcomes that are defensible in terms of the facts and the law”: Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190, at paragraph 74.
[53] Many of the points raised by the Broadcasters are an attempt to re-argue before us the evidence that was before the Board. In essence, the questions raised by the Broadcasters turn on whether ephemeral copies have economic value and, if so, the proper quantification of that value in the setting of royalties.
[54] The Broadcasters’ first approach to the question of the value of ephemeral copies was to argue that any value attached to ephemeral copies was compensated in the through-to-the-viewer licence issued to the producers who paid for a synchronization licence with respect to an audiovisual work. A good deal of evidence was led to show that the through-to-the-viewer licence was the industry standard in Canada and that the terms of such a licence made the issue of broadcast-incidental copies redundant since all downstream reproductions are covered by the terms of the licence. The Broadcasters say that the Board cannot or should not make an order contrary to established commercial practice in the broadcasting industry.
[55] Notwithstanding the Broadcasters’ attempt to make this a question of law, it is one of fact. Did the producers from whom they obtained programs (with respect to which SODRAC administered the reproduction rights) obtain a through to the viewer licence from SODRAC? If the answer to the question is no, it is of no assistance to the Broadcasters to say that they thought the producers had obtained such licences or that they ought to have.
[56] The Board examined the evidence submitted by the parties on this question, including a number of synchronization licences issued by SODRAC and came to the conclusion that “in the relevant market, the province of Québec, through-to-the-viewer licensing exists but is not the norm”: Decision, at paragraph 78. It is not this Court’s role to review the evidence and to decide if it would come to the same conclusion. The Board’s conclusion is based on the evide