Society of Composers, Authors and Music Publishers of Canada v. Vidéotron Ltée

Society of Composers, Authors and Music Publishers of Canada v. Vidéotron Ltée
Court (s) Database
Federal Court Decisions
Date
2023-10-18
Neutral citation
2023 FC 1385
File numbers
T-1380-22
Decision Content
Date: 20231018
Docket: T-1380-22
Citation: 2023 FC 1385
Ottawa, Ontario, October 18, 2023
PRESENT: Mr. Justice McHaffie
BETWEEN:
SOCIETY OF COMPOSERS, AUTHORS
AND MUSIC PUBLISHERS OF CANADA
Plaintiff
and
VIDÉOTRON LTÉE AND
QUÉBECOR MÉDIA INC.
Defendants
ORDER AND REASONS
I. Overview [1] Québecor Média Inc and Vidéotron Ltée [Québecor] move to strike the Statement of Claim of the Society of Composers, Authors and Music Publishers of Canada [SOCAN] or, alternatively, to stay this action in favour of proceedings in the Superior Court of Quebec. Québecor asserts it is plain and obvious that the Federal Court does not have jurisdiction over the proceeding or, alternatively, that its jurisdiction is sufficiently uncertain that the matter should proceed in the Superior Court, which is admitted to have jurisdiction.
[2] SOCAN’s claim arises from a dispute over royalties payable for Québecor’s use of works in SOCAN’s repertoire in 2018. Québecor accepts it owed royalties for that use. However, at the end of 2018, it deducted from its royalty payment amounts it claims it overpaid in 2014 to 2018. Québecor’s position that there was an overpayment stems from a 2018 agreement between SOCAN, Québecor, and other broadcast distribution undertakings [BDUs], addressing certain obligations regarding copyright tariffs [2018 Agreement]. SOCAN agrees there was an overpayment beginning in April 2018, but disagrees there was an overpayment in 2014 to March 2018, and disagrees that Québecor had any right to unilaterally set off any such overpayment against amounts owing in 2018.
[3] Québecor’s jurisdictional argument is based on its assertion that although the Copyright Act, RSC 1985, c C-42, forms the background to the matter, the only disputed issues pertain to the interpretation of the 2018 Agreement. It characterizes the matter as being essentially a claim in breach of contract that raises issues related to the doctrine of equitable set-off, and argues the Federal Court has no jurisdiction over a case based on such issues of provincial law.
[4] I conclude it is not plain and obvious this Court has no jurisdiction over SOCAN’s claim. The claim seeks remedies pursuant to the Copyright Act, namely the payment of amounts due under copyright tariffs, or alternatively damages or statutory damages for infringement of copyright. Many of the requisite elements of SOCAN’s claim may be conceded by Québecor, and the determination of the claim, and in particular Québecor’s primary defence to the claim, may require the interpretation of a contract. However, it is not plain and obvious that this changes the essential nature or character of the claim or otherwise takes it outside the jurisdiction conferred on this Court by the Copyright Act.
[5] Given the nature of Québecor’s motion, the Court is not called upon to decide this jurisdictional issue as a final matter. However, in requesting a stay, Québecor contends there is at least uncertainty regarding the Court’s jurisdiction, such that the interests of justice favour having the matter proceed in the Superior Court of Quebec. In my view, even assuming such jurisdictional uncertainty is an appropriate basis for a stay, there is insufficient uncertainty regarding the Court’s jurisdiction, and insufficient evidence of prejudice to Québecor, to justify staying the proceeding in the forum chosen by SOCAN in favour of that chosen by Québecor.
[6] The motion is therefore dismissed. In accordance with the parties’ agreement, SOCAN will have its costs in the amount of $6,000.
[7] I conclude this overview by commending the parties and their counsel for the focused, co-operative, and skillful manner in which this motion was presented.
II. Issues [8] Two issues are raised on this motion:
Should SOCAN’s Statement of Claim be struck for want of jurisdiction?
If not, should the action be stayed in favour of litigation in the Superior Court of Quebec?
III. Analysis A. The Statement of Claim should not be struck (1) Principles on a motion to strike [9] The principles applicable to a motion to strike a pleading under Rule 221 of the Federal Courts Rules, SOR/98-106, are well established. To strike a claim for lack of jurisdiction, it must be “plain and obvious” the Federal Court lacks jurisdiction: Windsor (City) v Canadian Transit Co, 2016 SCC 54 [Windsor Bridge] at para 24, citing Hodgson v Ermineskin Indian Band No 942, 2000 CanLII 15066 (FC) at para 10; Canada v Roitman, 2006 FCA 266 at para 15; Canada v Domtar Inc, 2009 FCA 218 at para 21; Berenguer v Sata Internacional – Azores Airlines, SA, 2023 FCA 176 at paras 22–26. The converse of the “plain and obvious” standard is sometimes described as whether there is “some chance of success” or an “arguable case”: Hunt v Carey Canada Inc, [1990] 2 SCR 959 at pp 972, 974, 980, 989; Bauer Hockey Corp v Sport Maska Inc (Reebok-CCM Hockey), 2014 FCA 158 at para 35; Alberta v Canada, 2018 FCA 83 at paras 15, 36, 62; Berenguer at para 47. For concision, I will use the term “arguable” to describe the situation where the “plain and obvious” standard is not met.
[10] When a motion to strike is brought on jurisdictional grounds, parties may file evidence going to the jurisdictional issue: Berenguer at para 26; Hodgson at para 9; both citing MIL Davie Inc v Société d’Exploitation et de Développement d’Hibernia Ltée, 1998 CanLII 7789 (FCA) at paras 7–8; but see JP Morgan Asset Management (Canada) Inc v Canada (National Revenue), 2013 FCA 250 at paras 51–64 on limits to this principle, at least in the context of judicial review. The parties did so in this case in the form of a thorough Agreed Statement of Facts that exhibited relevant underlying documents and set out the background to the claim, to which they agreed for the purposes of this motion only. Much of the Agreed Statement of Facts mirrors the allegations in the Statement of Claim, attaches documents referred to in it, or sets out the status of other proceedings: JP Morgan at para 54. In the circumstances, given the parties’ agreement and the nature of the arguments raised, I am satisfied it is in the interests of justice to consider the Agreed Statement of Facts in assessing the motion to strike as well as the alternative relief of a stay: JP Morgan at para 53; Berenguer at para 26.
(2) Principles in assessing the jurisdiction of the Federal Court [11] The Federal Court is a statutory court created pursuant to section 101 of the Constitution Act, 1867, as a court “for the better Administration of the Laws of Canada”: 744185 Ontario Inc v Canada, 2020 FCA 1 [Air Muskoka] at para 29; Windsor Bridge at para 31. As a statutory court, it has only the jurisdiction conferred on it by statute: Air Muskoka at para 28; Windsor Bridge at para 33. The conferral of jurisdiction is itself constitutionally limited by section 101. Assessing whether the Federal Court has jurisdiction over a claim therefore involves a determination of whether the claim falls within the scope of a valid statutory grant of jurisdiction to this Court made for the administration of federal law: Windsor Bridge at paras 33–35.
[12] As the Federal Court of Appeal stated in Roitman, when assessing whether the Federal Court has jurisdiction over an action, a statement of claim is not “blindly read at its face meaning.” Rather, the Court looks at the nature of the claim itself to ensure the claim is not a “disguised attempt” to create jurisdiction in the Federal Court: Roitman at para 16. The Court of Appeal later described this as involving a “first step” of characterizing the “essential nature of the claim,” an assessment that involves a “realistic appreciation of the practical result sought by the claimant” and consideration of their “principal objective”: Domtar at paras 26–30; JP Morgan at para 50.
[13] In the Windsor Bridge case, the majority of the Supreme Court adopted the language and approach from Roitman, Domtar, and JP Morgan, confirming the need for a preliminary determination of the “essential nature or character” of the claim based on an assessment of the practical result sought by the claimant: Windsor Bridge at paras 25–26. This assessment is not done in a “piecemeal or issue-by-issue fashion”: Windsor Bridge at para 25. Nonetheless, the Court may have jurisdiction over part of a claim but not other parts, and may have jurisdiction over the subject matter of a claim but not that of a particular defence or of a third party claim: see, e.g., Pasqua First Nation v Canada (Attorney General), 2016 FCA 133 at para 8, leave to appeal ref’d 2016 CanLII 89832 (SCC); Air Muskoka at para 32; McCain Foods Limited v JR Simplot Company, 2021 FCA 4 at paras 57–65, 90–95; Inuksuk I (Ship) v Sealand Marine Electronics Sales and Services Ltd, 2023 FCA 170 at paras 51–56.
[14] While the statement of claim is not read blindly, the determination of the essential nature of the claim is an assessment of the claim the plaintiff chose to bring, rather than a claim it might have brought: Windsor Bridge at para 27. The focus is on the plaintiff’s cause of action, the basis for it, and their right to seek the remedy sought: Windsor Bridge at paras 41–42; McCain at para 59. In Windsor Bridge, this assessment was primarily undertaken through a review of the relief sought by the plaintiff: Windsor Bridge at paras 28–30.
[15] Once the essential nature or character of the claim is identified, the assessment of whether the Federal Court has jurisdiction over that claim follows the three-part analysis known as the ITO test, established by the Supreme Court in ITO—International Terminal Operators Ltd v Miida Electronics Inc, [1986] 1 SCR 752 at p 766. The ITO test sets out three essential requirements to support a finding of jurisdiction in the Federal Court:
1. There must be a statutory grant of jurisdiction by the federal Parliament.
2. There must be an existing body of federal law which is essential to the disposition of the case and which nourishes the statutory grant of jurisdiction.
3. The law on which the case is based must be “a law of Canada” as the phrase is used in s. 101 of the Constitution Act, 1867.
[16] The parties agree that the ITO test governs the assessment of jurisdiction. However, they disagree on its application, and in particular on the nature of SOCAN’s claim.
[17] While Windsor Bridge confirms that the assessment of jurisdiction is done on the “plain and obvious” standard, it is less clear from the Supreme Court’s analysis that each step (the initial essential nature assessment and the three parts of the ITO test) is to be assessed on this standard: Windsor Bridge at paras 24, 28–30, 36–65. However, the Federal Court of Appeal has recently confirmed that the “plain and obvious” standard applies each step of the way: Berenguer at paras 41, 47, 57, 61–67.
(3) Background to SOCAN’s claim (a) Statutory framework regarding copyright tariffs and collective societies [18] SOCAN is a collective society, authorized under what is now Part VII.1 of the Copyright Act to collect and distribute to its members royalties for the use of certain rights in its repertoire of musical works. Relevant to this action, SOCAN holds the exclusive right to authorize uses of performance and communication rights in Canada.
[19] Some of the royalties SOCAN collects are paid pursuant to tariffs approved by the Copyright Board. Subsection 67(1) of the Copyright Act provides that collective societies may file a proposed tariff for the purpose of establishing royalties with respect to rights it administers. The Copyright Act then sets out a process for the filing and publication of tariffs; the filing of objections; and the approval of tariffs: Copyright Act, ss 68–70.1. Where a tariff is approved, the collective society may collect the royalties specified in the tariff and, if they are not paid, recover them in a court of competent jurisdiction: Copyright Act, s 73. Conversely, a user of copyright cannot be sued for infringement where they have paid or offered to pay the royalties set out in the tariff applicable to the use: Copyright Act, s 73.3(a).
[20] The Copyright Act provides for the possibility that a proposed tariff may not be approved in advance of, or even during, the period to which it applies. Where there is a previous tariff in respect of the same act covered in a proposed tariff, then an authorized person may do the acts covered by the previous tariff, and the collective society may collect the royalties in accordance with the previous tariff: Copyright Act, ss 73.2, 73.3(b). Where there is no previous tariff, then a person may not be sued if they pay or offer to pay the royalties set out in the proposed tariff that will apply to the act once approved: Copyright Act, s 73.3(c).
[21] Instead of collecting royalties pursuant to an approved tariff, subsection 67(3) of the Copyright Act provides that SOCAN can now, like other collective societies, enter into agreements for the purpose of establishing royalties. Approved tariffs do not apply in respect of the matters covered by an agreement referred to in subsection 67(3): Copyright Act, s 74.
[22] The sections of the Copyright Act referred to above were part of significant amendments to the provisions governing collective administration of copyright that came into force in April 2019: Budget Implementation Act, 2018, No 2, SC 2018, c 27, ss 296, 302. Some of the provisions had analogs in the prior version of the Copyright Act. However, under the former version of the Copyright Act, while many collective societies could enter agreements setting royalties for use of copyright works, the public performance and telecommunication to the public rights SOCAN administers had to be the subject of tariffs: Copyright Act (former version), ss 67–68.2, 70.12; York University v Canadian Copyright Licensing Agency (“Access Copyright”), 2020 FCA 77 at paras 177–178, aff’d 2021 SCC 32; Re: Sound v Canadian Association of Broadcasters, 2017 FCA 138 at paras 9–13, 82.
(b) The tariffs relevant to this proceeding [23] Québecor and other BDUs transmit audiovisual programming to viewers in Canada in a number of ways. This includes traditional broadcast by commercial television stations, pay and speciality services, and newer online services. Different tariffs cover the use of SOCAN’s repertoire by BDUs in their various operations, some of which uses may be covered by more than one tariff. Québecor makes periodic payments to SOCAN in respect of royalties owing pursuant to these tariffs. At issue in this proceeding are the following six tariffs:
Tariff 16 – Background Music Suppliers
Tariff 17 – Transmission of Pay, Specialty and Other Television Services by Distribution Undertakings
Tariff 22.D.1 – Online Audiovisual Services
Tariff 22.D.3 – Allied Audiovisual Services
Tariff 26 – Pay Audio Services
Tariff for the Retransmission of Distant Television Signals [Retransmission Tariff]
[24] The parties agree for the purposes of this motion that Québecor’s use of the musical works in SOCAN’s repertoire in the period from July to December 2018 resulted in royalties owing under the foregoing tariffs in the total amount of about $1.5 million. Of this, the large part (almost $1.3 million) relates to Tariff 17, with various amounts under $90,000 attributable to each of the other tariffs.
[25] Of the above tariffs, only the Retransmission Tariff has been approved by the Copyright Board for 2018. Tariff 16 was most recently approved for the 2010–2011 period. Tariff 17 was most recently approved for 2009–2013. Tariffs 22.D.1 and 22.D.3 were most recently approved for 2007–2013. Tariff 26 was most recently approved for 2007–2016.
(c) The 2018 Agreement [26] In the context of a number of pending proposed SOCAN tariffs that had not yet been considered by the Copyright Board, SOCAN, Québecor, and other BDUs entered into the 2018 Agreement, which is entitled “Experimental Audiovisual Broadcast, BDU and Online Agreement.” The 2018 Agreement addressed three tariffs in particular: Tariff 2.A, which covers broadcast by commercial television stations, Tariff 17, and Tariff 22.D.3.
[27] The 2018 Agreement refers to the tariffs previously approved by the Copyright Board in respect of Tariff 2.A, Tariff 17, and Tariffs 22.B-G, and to SOCAN’s proposed tariffs for various years in respect of Tariff 2.A, Tariff 17, and Tariffs 22.4, 22.D, and 22.D.1. At the time, the BDUs had filed objections to SOCAN’s proposed tariffs, which were pending before the Board.
[28] The 2018 Agreement states the parties had reached consensus on the royalties and other terms applicable to the proposed tariffs for the period from 2007 to 2020. The parties agreed that SOCAN would file, and ask the Board to approve, proposed “settlement tariffs” for Tariffs 2.A, 17, and a new 22.D.3. For Tariffs 2.A and 17, these settlement tariffs took the form of the last tariffs approved by the Board, which already applied by operation of then subsection 68.2(3) of the Copyright Act, a predecessor of the current section 73.2. For Tariff 22.D.3, the settlement tariff was in a form agreed by the parties and attached to the agreement. On this basis, the BDUs agreed to withdraw their objections to the proposed tariffs.
[29] The 2018 Agreement contains five further provisions relevant to this proceeding:
in the event the Board failed to certify tariffs reflecting the terms of the agreement and the settlement tariffs, the settlement tariffs would remain in force as between the parties (Section 4);
regardless of whether the Board certified the settlement tariffs, and notwithstanding their terms, the parties agreed the BDUs had “made all payments and satisfied all other obligations owing by them” under the certified and proposed tariffs, to the execution date of the agreement (Section 5);
beginning with the first calendar month after the date of execution, the BDUs would abide by the settlement tariffs by paying the royalties and taking the other steps in them (Section 6);
payments during the term of the agreement under the settlement tariffs were deemed to satisfy the BDUs’ obligations, even if the Board did not certify the settlement tariffs (Section 9); and
as a recital to the agreement, SOCAN acknowledged that the BDUs may use SOCAN’s repertoire in ways that fall within more than one of the settlement tariffs, and the BDUs confirmed their intention to report and pay for these uses under a single one of the tariffs where practicable (Recital M).
[30] With respect to Recital M, the parties agree that their stated intention in establishing the new Tariff 22.D.3 was for the BDUs to report and pay for overlapping uses under a single tariff so as to provide a harmonized royalty rate.
(d) The disputed payment and set-off [31] After signing the 2018 Agreement in early 2018, Québecor continued to make royalty payments to SOCAN in the manner it had done previously. This approach did not account for the proposed new Tariff 22.D.3 and the single-tariff approach for overlapping uses. In particular, with respect to one of its internet services, Club illico, Québecor continued to pay royalties under Tariff 22.D.1, instead of under Tariffs 17 and 22.D.3, which it could do under the 2018 Agreement. The latter approach would have resulted in lower royalties. Québecor continued to calculate and pay royalties under the former approach until October 2018.
[32] On October 31, 2018, Québecor advised SOCAN it would apply the terms of the 2018 Agreement retroactively to royalty payments it had made in respect of Club illico for the period from 2014 to 2018. On its calculations, the difference between the amount it paid using the old method (under Tariff 22.D.1) and the amount it would have paid using the new method (under Tariffs 17 and 22.D.3) was around $1.435 million.
[33] In December 2018, Québecor made a royalty payment to SOCAN. By this time, Québecor had royalties due to SOCAN of about $1.531 million under the six tariffs listed in paragraph [23], for the period from July to December 2018. Québecor deducted the $1.435 million it considered it had overpaid in the 2014 to 2018 period in respect of Club illico, and paid SOCAN a little under $100,000.
[34] As noted above, SOCAN agrees Québecor can use the royalty method set out in the 2018 Agreement for the period after April 2018. However, it contests Québecor’s ability to apply the new method retroactively to periods before April 2018, and its ability to apply any such claimed overpayment amounts as a set-off against amounts owing under other tariffs.
(e) Current status of the tariffs [35] In accordance with the 2018 Agreement, SOCAN filed proposed “settlement tariffs” in respect of Tariffs 2.A, 17, and 22.D.3. To date, proposed Tariffs 2.A and 17 have not been approved by the Copyright Board. By operation of section 73.2 of the Copyright Act, the last approved tariffs from 2013 remain operative. The Board approved Tariff 22.D.3 for the 2007–2013 period on February 24, 2023, but has yet to approve it for the 2014–2018 period: SOCAN Tariff 22.D.3 – Audiovisual Services Allied with Programming and Distribution Undertakings (2007–2013), 2023 CB 1. I note that while the parties refer to “Settlement Tariff 22.D.3,” the tariff approved and published by the Board is not referred to as a “settlement tariff” but simply as “SOCAN Tariff 22.D.3 – Audiovisual Services Allied with Programming and Distribution Undertakings (2007–2013).”
(4) SOCAN’s claim [36] SOCAN started this action in July 2022. As its primary grounds of relief, SOCAN’s Statement of Claim claims the following:
(a) pursuant to sections 73 and 73.1 of the [Copyright Act], without prejudice to any other remedies available to the Plaintiff, $1,435,509.20 from the Defendants, which is the outstanding balance (inclusive of applicable taxes) of the royalties due under SOCAN Tariffs 16, 17, 22.D.1, and 26, and the Tariff for the Retransmission of Distant Television Signals, for the Unpaid Periods (as defined below);
(b) in the alternative to subparagraph (a) above, pursuant to section 35 of the Copyright Act, damages for copyright infringement arising out of the Defendants’ unauthorized use of the Performing Rights in SOCAN’s Musical Works during the Unpaid Periods (as those terms are defined below);
(c) in the alternative to subparagraphs (a) and (b) above, and as the Plaintiff may elect, statutory damages pursuant to sections 38.1(4) and (4.1) of the Copyright Act from the Defendants, in a sum of no less than three and not more than ten times the amount of the outstanding balance of the royalties due to the Plaintiff under SOCAN Tariffs 16, 17, 22.D.1, and 26, and the Tariff for the Retransmission of Distant Television Signals, for the Unpaid Periods, plus applicable taxes;
[37] The Statement of Claim sets out SOCAN’s rights and describes the relevant tariffs. It also recites the background to the dispute, including the 2018 Agreement and the disputed withholding of the amounts Québecor believed it overpaid for the 2014 to 2018 period. SOCAN alleges the withholding was improper and is not justified or authorized by anything in the 2018 Agreement or the various tariffs. SOCAN alleges that since Québecor has not paid the requisite royalties, its uses were unlicensed and constituted infringement.
[38] Québecor has not defended this action. Rather, it served this motion to strike or stay the action on August 23, 2022.
(5) Litigation in the Superior Court of Quebec [39] On August 22, 2022, Québecor filed a proceeding in the Superior Court of Quebec, seeking a declaration that SOCAN’s claim was time barred or, alternatively, that the 2018 Agreement did not prevent Québecor from setting off the asserted overpayment against other amounts due to SOCAN. SOCAN has defended that proceeding.
[40] In October 2022, SOCAN filed an originating application in the Superior Court of Quebec. Its application largely parallels the claims asserted in the Statement of Claim. According to SOCAN, it filed this claim essentially to preserve its rights in light of Québecor’s motion and the possibility that this Court might find it does not have jurisdiction over the claim.
[41] The Superior Court of Quebec has joined the two proceedings. They are currently suspended, pending the determination of this motion. The joined proceeding remains at the pleadings stage and will not advance until this motion is determined.
[42] Although it has not defended this action, Québecor has unilaterally admitted that (a) SOCAN represents the owners of copyright in the works at issue; (b) it used copyrighted works in certain of its commercial activities during the relevant period; (c) subject to the defences raised in the Superior Court of Quebec, it is obliged to pay SOCAN the balance of $1.435 million for the use of the works in the relevant periods; and (d) it undertakes to raise no defence arising solely under the Copyright Act (such as fair use) in opposition to SOCAN’s claim, either before this Court or before the Superior Court of Quebec. In its oral submissions, Québecor further confirmed that its defences to SOCAN’s claim are limited to it having overpaid for royalties in the 2014 to 2018 period; its ability to set off that overpayment against the royalty payments to SOCAN in December 2018; and the application of provincial limitation periods.
(6) The essential nature of SOCAN’s claim [43] Québecor argues the essential nature or character of SOCAN’s claim is a dispute over the interpretation of the 2018 Agreement, including its entitlement to apply the principle of set-off with respect to the overpayment it asserts arises from the agreement. It argues the other aspects of SOCAN’s claim are not “worthwhile pursuing,” to use the language in paragraph 29 of Windsor Bridge, since the contractual and set-off issues will determine the entirety of the claim. It argues there are no issues or concepts related to copyright in question; only contractual analysis. It further notes that the source of SOCAN’s claim (the royalties payable) arises primarily from the 2018 Agreement, while its claimed set-off amount arises exclusively from the 2018 Agreement. It therefore asserts that it is plain and obvious that the essential character of SOCAN’s claim relates to provincial law of contract and set-off, and not copyright.
[44] I am not persuaded. SOCAN’s claim, both as drafted and in its essence, seeks to recover money payable as royalties for the use of copyright works. It asserts a right to collect such royalties on behalf of copyright owners as a collective society under the Copyright Act. It primarily claims the amounts owing to it as royalties payable pursuant to five tariffs, based on the Copyright Board’s approval of those tariffs and SOCAN’s ability to continue collecting royalties during the period between the expiry of approved tariffs and the approval of new proposed tariffs. Alternatively, SOCAN seeks damages or statutory damages for infringement of copyright. The “practical result” sought by SOCAN is the payment of money for Québecor’s use of the copyright in works in its repertoire.
[45] In my view, it is not plain and obvious that the essential character of SOCAN’s claim is one of provincial contract law, rather than the enforcement of copyright and copyright tariffs.
[46] Contrary to Québecor’s argument, it is not plain and obvious that the essential character of SOCAN’s claim changes from one of copyright enforcement to one of contract simply because it admits that SOCAN is entitled to enforce copyright and copyright tariffs, but asserts that it has defences to SOCAN’s claim arising from an agreement. These defences do not turn SOCAN’s claim into, in effect, a request for a declaration regarding the interpretation of a contract. While Québecor seeks that remedy in the Superior Court of Quebec, the essential character determination assesses “the particular claim the claimant has chosen to bring, not a similar claim the respondent says the claimant really ought, for one reason or another, to have brought”: Windsor Bridge at para 27.
[47] In this regard, SOCAN argues the defences Québecor may raise are irrelevant, and the essential character of a claim should be addressed only by looking at the claim itself. There is some strength to this argument. The majority in Windsor Bridge stated that “[t]he conferral of jurisdiction depends on the nature of the claim or remedy sought” [emphasis added], without reference to the defences to that claim or remedy: Windsor Bridge at para 25. As SOCAN points out, the cases assessing the essential character of a claim for the purposes of assessing the Federal Court’s jurisdiction look at the claim or application in issue and not the available defences or responses to it: see, e.g., Windsor Bridge at paras 25–30; Roitman at paras 17–18, 24–28; Domtar at paras 26–30; McCain at paras 59, 65–67, 98; JP Morgan at paras 49–52, 63–64.
[48] In supplementary submissions on the Federal Court of Appeal’s recent decision in Berenguer, Québecor argued that the Court had looked at possible defences in assessing the jurisdiction question, namely whether the claim was barred by the Montreal Convention: Berenguer at para 65. However, Justice Woods’ observation was simply that the Carriage by Air Act, RSC 1985, c C-26, which incorporates the Montreal Convention, was essential to the disposition of the case and nourished the grant of jurisdiction. She separately assessed whether the action should be struck because it was plain and obvious that it was barred by the Convention, but this does not mean that all of the various defences a defendant might raise, whether factual or legal, are relevant to assessing the essential nature of a claim: Berenguer at paras 65, 69–78. Similarly, the appropriateness of considering the main claim in an action for the purposes of considering the essential nature of a third party claim does not mean that defences are equally relevant to the assessment of the claim: Air Muskoka at para 32.
[49] I also note that in this case, the matter of jurisdiction comes before the Court under Rule 221. That Rule is directed at striking out a particular pleading based on its contents. This again suggests that the focus should be on SOCAN’s claim and not Québecor’s defences.
[50] I need not decide this issue, as it is not plain and obvious that the defences Québecor raises, even if they are relevant to the essential nature analysis, change the nature of SOCAN’s claim from that presented in its Statement of Claim.
[51] To establish its claim under the Copyright Act, SOCAN must establish its right to do so on behalf of copyright owners; Québecor’s use of copyright works in its repertoire; and Québecor’s resulting liability for either payment of royalties under a tariff or for infringement damages. Québecor may admit one, more, or all of these matters. However, such admissions, and the absence of any contentious “copyright issues,” does not necessarily turn the case from a copyright case into a contract case, or one that is in essence about Québecor’s asserted defences based on the 2018 Agreement. As the Federal Court of Appeal noted in Salt Canada, the Federal Courts may be called upon to interpret agreements in exercising their jurisdiction in areas of federal competence, including intellectual property: Salt Canada Inc v Baker, 2020 FCA 127 at paras 15–20, 26. Justice Stratas, for the Court of Appeal, rejected an approach of trying to determine just how much contractual interpretation is involved in a particular case for the purposes of determining jurisdiction: Salt Canada at para 31. It is not plain and obvious that Québecor’s admissions and defences referring to the 2018 Agreement change the essential nature of the case from a copyright enforcement case to a contract case.
[52] Québecor’s arguments rely heavily on its assertion that both the 2018 amounts it owed under Tariff 17 and the source of its asserted overpayment are contractual in nature, having arisen under the 2018 Agreement. It characterizes the 2018 Agreement as the parties’ agreement to fix their royalties by contract, rather than relying on tariffs. SOCAN, on the other hand, characterizes the royalties as owing under the Tariffs. As set out in paragraph [36], it claims the amount of $ 1.435 million as the “outstanding balance […] of the royalties due under SOCAN Tariffs […].”
[53] It is at least arguable that the 2018 Agreement does not itself create an agreement between the parties on the royalties payable for use of copyright works. Rather, under the 2018 Agreement, the parties agreed on the terms of tariffs to be filed with the Board, and agreed to abide by the terms of those tariffs. Only if the Board fails to certify the settlement tariffs does the agreement say that the tariffs will nonetheless remain in force.
[54] Indeed, as the parties recognized, the 2018 Agreement was entered into before the 2019 amendment of the Copyright Act permitting SOCAN to enter agreements establishing royalties for public performance and telecommunication rights. Tariff 17 had been approved by the Copyright Board and was subsequently proposed by SOCAN on the same terms. Thus, while Québecor qualifies the amounts due in 2018 under Tariff 17 as “contractual” amounts under the 2018 Agreement, they remained, at least arguably, amounts payable under a statutory tariff. It is not plain and obvious that agreeing to abide by a statutory tariff turns a payment under the tariff into a contractual payment rather than a tariff payment.
[55] Québecor’s primary defence to SOCAN’s allegations of non-payment of royalties, unauthorized use and copyright infringement is that it effectively already paid the amounts owing under the various tariffs by virtue of the amounts it paid under another statutory tariff, namely Tariff 22.D.1. It claims an entitlement to offset the previously paid Tariff 22.D.1 amounts against the amounts owing under five different tariffs, including three tariffs not addressed at all under the agreement (Tariffs 16 and 26 and the Retransmission Tariff). Considering the essential nature of the claim as a whole and not on a “piecemeal” basis, it is arguable that Québecor’s defence that it has effectively already paid is simply a defence to a copyright enforcement claim, and does not change the essential nature of the claim.
[56] Finally, Québecor argues SOCAN itself identified the central issues in its Statement of Claim. At paragraph 43 of the Statement of Claim, SOCAN states that Québecor’s withholding of the amounts otherwise owing in royalties was improper because (1) the 2018 Agreement prohibited adjusting royalty payments prior to March 2018; (2) neither the tariffs or the 2018 Agreement grants Québecor a right of set-off; and (3) Tariff 16 and the Retransmission Tariff, which are not part of the 2018 Agreement, do not permit Québecor to offset overpayments said to have been made under other tariffs. In my view, it is not plain and obvious that SOCAN’s allegation that Québecor was not entitled to make the deduction makes the essential nature of the claim one of contract. Again, there may be contractual issues that need to be decided. But the existence of contractual issues alone does not change the essential nature of the case.
(7) The ITO test [57] Having addressed the essential nature of the claim, I turn to the ITO test. For the reasons below, I conclude it is at least arguable the Federal Court has jurisdiction over SOCAN’s claim. I further conclude that even on Québecor’s characterization of the claim as being an action in breach of contract, it remains at least arguable the Federal Court has jurisdiction over it.
(a) Statutory grant of jurisdiction [58] Subsection 20(2) of the Federal Courts Act, RSC 1985, c F-7, grants the Federal Court concurrent jurisdiction in cases in which “a remedy is sought under the authority of an Act of Parliament or at law or in equity respecting any […] copyright […].” Section 26 of the Federal Courts Act further provides that the Federal Court has original jurisdiction in respect of any matter over which “jurisdiction has been conferred by an Act of Parliament on the […] Federal Court.” The Copyright Act then contains a number of specific provisions granting jurisdiction to the Federal Court. Relevant in this case is section 41.24, which reads as follows:
Concurrent jurisdiction of Federal Court
Juridiction concurrente de la Cour fédérale
41.24 The Federal Court has concurrent jurisdiction with provincial courts to hear and determine all proceedings, other than the prosecution of offences under sections 42 and 43, for the enforcement of a provision of this Act or of the civil remedies provided by this Act.
41.24 La Cour fédérale, concurremment avec les tribunaux provinciaux, connaît de toute procédure liée à l’application de la présente loi, à l’exclusion des poursuites des infractions visées aux articles 42 et 43.
[Emphasis added.]
[Je souligne.]
[59] There are differences in the French and English versions of this provision. The English version refers to proceedings for the enforcement of (i) a provision of, or (ii) the civil remedies provided by, the Copyright Act. The French version refers to “toute procédure liée à l’application de la présente loi,” which might be literally translated as “all proceedings related to the application of this Act.” The French version is arguably somewhat broader, since it does not limit the proceedings described to those for “enforcement.” Québecor suggests that applying the “shared meaning” rule, the Court should apply the English version, to the extent it is narrower: see Merck Frosst Canada Ltd v Canada (Health), 2012 SCC 3 at para 203. I need not decide this issue, as even on the English version of the section, it is at least arguable that section 41.24 grants this Court jurisdiction over SOCAN’s claim.
[60] If the essential nature of SOCAN’s claim is one to enforce copyright or a copyright tariff, section 41.24 clearly grants this Court jurisdiction over such a claim. It seeks a civil remedy of damages to enforce the copyrights it administers and/or the tariffs approved or proposed under Part VII.1. In particular, it seeks to enforce provisions of the Copyright Act, namely sections 73 and 73.1. As I have concluded above, it is at least arguable this is the essential nature of SOCAN’s claim.
[61] However, even if characterized as a claim by a collective society for the enforcement of a contract pertaining to copyright royalties, as Québecor contends, it is not plain and obvious that such a claim falls beyond the statutory grant in section 41.24. Québecor argues that although Parliament has clearly granted the Federal Court jurisdiction in copyright matters, that grant does not extend to purely contractual matters between two private parties, citing McCain at para 63; Hutchingame Growth Capital Corporation v Dayton Boot Co Enterprises Ltd, 2019 FCA 152 at para 55; and Alpha Marathon Technologies Inc v Dual Spiral Systems Inc, 2017 FC 1119 at paras 63, 84–85.
[62] The Court of Appeal in McCain cited its decision in Salt Canada, noting that the issue in that case was the specific grant of jurisdiction contained in section 52 of the Patent Act, RSC 1985, c P-4: McCain at para 63. Both McCain and Salt Canada make clear that the question is the scope of the statutory grant of jurisdiction, interpreted in accordance with the usual approach to statutory interpretation: McCain at paras 63–64; Salt Canada at paras 5, 7–12.
[63] Does section 41.24 of the Copyright Act grant jurisdiction to the Federal Court over a case that is in essence a claim by a collective society for the enforcement of a contract pertaining to copyright royalties? In