Canadian Broadcasting Corp. v. SODRAC 2003 Inc.

Canadian Broadcasting Corp. v. SODRAC 2003 Inc.
Collection
Supreme Court Judgments
Date
2015-11-26
Neutral citation
2015 SCC 57
Report
[2015] 3 SCR 615
Case number
35918
Judges
McLachlin, Beverley; Abella, Rosalie Silberman; Rothstein, Marshall; Cromwell, Thomas Albert; Moldaver, Michael J.; Karakatsanis, Andromache; Wagner, Richard; Gascon, Clément; Côté, Suzanne
On appeal from
Federal Court of Appeal
Subjects
Administrative law
Intellectual property
Notes
SCC Case Information: 35918
Decision Content
SUPREME COURT OF CANADA
Citation: Canadian Broadcasting Corp. v. SODRAC 2003 Inc., 2015 SCC 57, [2015] 3 S.C.R. 615
Date: 20151126
Docket: 35918
Between:
Canadian Broadcasting Corporation
Appellant
and
SODRAC 2003 Inc. and Society for Reproduction Rights of Authors,
Composers and Publishers in Canada (SODRAC) Inc.
Respondents
- and -
Centre for Intellectual Property Policy, Ariel Katz,
Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic,
Canadian Musical Reproduction Rights Agency Ltd., Canadian Music Publishers Association, International Confederation of Music Publishers, Music Canada,
International Federation of the Phonographic Industry, Canadian Council of
Music Industry Associations, Canadian Independent Music Association and
Association québécoise de l’industrie du disque, du spectacle et de la vidéo
Interveners
Coram: McLachlin C.J. and Abella, Rothstein, Cromwell, Moldaver, Karakatsanis, Wagner, Gascon and Côté JJ.
Reasons for Judgment:
(paras. 1 to 116)
Dissenting Reasons:
(paras. 117 to 192)
Dissenting Reasons:
(paras. 193 to 195)
Rothstein J. (McLachlin C.J. and Cromwell, Moldaver, Wagner, Gascon and Côté JJ. concurring)
Abella J.
Karakatsanis J.
Canadian Broadcasting Corp. v. SODRAC 2003 Inc., 2015 SCC 57, [2015] 3 S.C.R. 615
Canadian Broadcasting Corporation Appellant
v.
SODRAC 2003 Inc. and
Society for Reproduction Rights of Authors,
Composers and Publishers in Canada (SODRAC) Inc. Respondents
and
Centre for Intellectual Property Policy, Ariel Katz,
Samuelson‑Glushko Canadian Internet Policy and Public Interest Clinic,
Canadian Musical Reproduction Rights Agency Ltd.,
Canadian Music Publishers Association,
International Confederation of Music Publishers,
Music Canada, International Federation of the Phonographic Industry,
Canadian Council of Music Industry Associations,
Canadian Independent Music Association and
Association québécoise de l’industrie du disque,
du spectacle et de la vidéo Interveners
Indexed as: Canadian Broadcasting Corp. v. SODRAC 2003 Inc.
2015 SCC 57
File No.: 35918.
2015: March 16; 2015: November 26.
Present: McLachlin C.J. and Abella, Rothstein, Cromwell, Moldaver, Karakatsanis, Wagner, Gascon and Côté JJ.
on appeal from the federal court of appeal
Intellectual property — Copyright — Licences — Collective societies — SODRAC administering reproduction rights as collective society — Application by SODRAC to set terms and conditions of licence for reproduction by CBC of musical works in SODRAC’s repertoire from 2008 to 2012 — CBC making ephemeral synchronization copies, including musical works, as producer and ephemeral broadcast‑incidental copies, including musical works, as broadcaster — Synchronization copies made during production subject to licence — Whether broadcast‑incidental copies engage reproduction right — If so, whether licence for broadcast‑incidental copies should be implied in synchronization licences — If reproduction licence required for broadcast‑incidental copies, whether Board erred in valuation of licence — Whether Board applied principles of technological neutrality and balance properly — Copyright Act, R.S.C. 1985, c. C‑42, s. 3(1) (d).
Intellectual property — Copyright — Interim licences — Collective societies — Board decision setting terms and conditions of licence released after expiry of licence period — Board setting interim licence based on status quo — 2008‑2012 licence selected as status quo — Whether Board erred in setting terms of interim licence — Copyright Act, R.S.C. 1985, c. C‑42, s. 66.51 .
Administrative law — Judicial review — Standard of review — Copyright Board — Appropriate standard of review — Whether specific standard of review should be ascribed to each issue arising in decision under review.
CBC is both a producer and a broadcaster of television programs: it broadcasts its own original programs as well as those that it has licensed or bought from third parties, and it shows these programs on television and the Internet. SODRAC is a collective society organized to manage the reproduction rights of its members. When broadcasters, including CBC, produce a program, they make several kinds of copies. “Synchronization copies” incorporate musical works into an audiovisual program. A “master copy” is the final copy created when synchronization is complete. CBC loads the master copy into its digital content management system and makes several copies of the completed program, and thus of the music incorporated into the program, for internal use. Where these copies are made to facilitate broadcasting, they are called “broadcast‑incidental copies”.
Following Bishop v. Stevens, [1990] 2 S.C.R. 467, in which it was held that “ephemeral” copies engaged the reproduction right in s. 3(1) (d) of the Copyright Act and that the right to make those copies is not implied by law in a broadcast licence, SODRAC began to differentiate between synchronization copies and copies made for other purposes. Initially, it granted free synchronization licences to licence holders, but it began asking producers to pay for those licences in or about 2006. In 2008, when SODRAC and CBC were unable to come to an agreement for the renewal of CBC’s licence, SODRAC asked the Board to set the terms of a licence for November 14, 2008, to March 31, 2012. CBC argues that broadcast‑incidental copies do not engage the reproduction right, or, in the alternative, that if a licence covering broadcast‑incidental copies is required, it should be implied from its synchronization licences or the synchronization licences of third party producers.
In 2012, the Copyright Board held that CBC’s broadcast‑incidental copying activity engaged the reproduction right, that a licence for such copies could not be implied from synchronization licences covering the production process, and that CBC required a separate reproduction licence to legitimize its broadcast‑incidental copying. The Board valued this licence based on a ratio used in the commercial radio context and found to be equally applicable to the television context. The Board later issued an interim licence to take effect after the expiry of the 2008‑2012 licence that extended the terms of that licence on an interim basis, subject to minor modifications. The Federal Court of Appeal upheld both the 2008‑2012 licence and the interim licence that followed, subject to minor amendments.
Held (Abella and Karakatsanis JJ. dissenting): The appeal should be allowed; the 2008‑2012 licence and the interim licence should both be set aside and the decisions of the Copyright Board should be remitted to the Board for reconsideration.
Per McLachlin C.J. and Rothstein, Cromwell, Moldaver, Wagner, Gascon and Côté JJ.: Because of the unusual statutory scheme under which the Board and the court may each have to consider the same legal question at first instance, the standard of correctness applies to whether broadcast‑incidental copies engage the reproduction right, and thus whether the Copyright Act allows SODRAC to seek a licence for CBC’s broadcast‑incidental copying. A standard of reasonableness applies to each of the remaining issues.
The Board was correct in finding that broadcast‑incidental copying engages the reproduction right, consistent with this Court’s decision in Bishop and the context of the statutory scheme set out in the Copyright Act . Though this Court’s subsequent decisions in Théberge v. Galerie d’Art du Petit Champlain inc., 2002 SCC 34, [2002] 2 S.C.R. 336, and Entertainment Software Association v. Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 34, [2012] S.C.R. 231, have refined the understanding of the purposes of copyright law, the central holding in Bishop, that ephemeral copies engage the reproduction right, remains sound. Ephemeral copies are not exempted by ss. 30.8 and 30.9 , and nothing in the text, context or legislative history of ss. 3(1) , 30.8 or 30.9 supports the view that broadcast‑incidental copies are not reproductions under the Act. While balance between user and right‑holder interests and technological neutrality are central to Canadian copyright law, they cannot change the express terms of the Act.
The Board was also correct in finding that a licence to make broadcast‑incidental copies should not be implied from synchronization licences issued by SODRAC. The synchronization licences do not give any indication that they included the right to make broadcast‑incidental copies. The separation of synchronization and broadcast‑incidental licences does not offend technological neutrality. Recognizing production and broadcasting as distinct activities validly subject to disaggregated licences does not impose new layers of protections and fees based solely on technological change. Economic considerations also justified the practice of dividing synchronization and broadcast‑incidental copy licences.
However, the Board erred in failing to consider the principles of technological neutrality and balance in setting the valuation of this licence. The principle of technological neutrality recognizes that, absent parliamentary intent to the contrary, the Act should not be interpreted or applied to favour or discriminate against any particular form of technology. In the regulatory context, the principle of technological neutrality applies to valuation of a reproduction licence, so the Board should compare the value derived from the use of reproduction in the old and new technologies in its valuation analysis.
To maintain a balance between user and right‑holder interests, the Board must also assess the respective contributions of the user and the copyright‑protected works to the value enjoyed by the user. It must have regard for factors it considers relevant in striking a balance between user and right‑holder rights when fixing licence fees. Relevant factors will include the risks taken by the user, the extent of the investment made by the user in the new technology, and the nature of the copyright-protected work’s use in the new technology.
The 2008-2012 licence is set aside as it relates to the valuation of CBC’s television and Internet broadcast-incidental copies and the decision of the Board in that regard is remitted to the Board for reconsideration of that valuation in accordance with the principles of technological neutrality and balance. The Board’s valuation methodology did not give any indication that the principles of technological neutrality and balance were considered in the way it fixed the SODRAC reproduction royalties payable by CBC. The Board did not compare the value contributed by the copyright-protected reproductions in the old and new technology. It also failed to take into account the relative contributions made by the use of copyright-protected works and the risk and investment by the user in its new technology, as required by the balance principle.
It was reasonable to use the interim licence to maintain the status quo and to use the 2008‑2012 statutory licence as the status quo in this case. However, because the interim licence was based on the terms of the 2008‑2012 licence, it is set aside and the Board’s decision in that regard is also remitted for reconsideration consistent with the principles guiding the redetermination of the 2008‑2012 licence.
Finally, the Board has the statutory authority to fix the terms of licences pursuant to s. 70.2, but the user retains the ability to accept or decline those terms.
Per Abella J. (dissenting): The Board’s decision to impose royalty fees for broadcast‑incidental copies was unreasonable.
The Copyright Act strikes a careful balance between promoting the public interest in the encouragement and dissemination of creative works, and obtaining a just reward for creators. Maintaining the balance that best supports the public interest in creative works is the central purpose of the Copyright Act . The question is how to preserve this balance in the face of new technologies that are transforming the mechanisms through which creative works are produced, reproduced and distributed. The answer lies in applying a robust vision of technological neutrality as a core principle of statutory interpretation under the Copyright Act .
A reasonable interpretation of the scope of the reproduction right must consider the wording of ss. 3(1) and 3(1) (d) in the context of the overarching purpose of the Copyright Act and the central principle of technological neutrality. Adopting a literal interpretation of the right in s. 3(1) (d) would leave no room for the principle of technological neutrality, which is rooted in the words “to produce or reproduce the work or any substantial part thereof in any material form whatever”. Technological neutrality ensures that copyright attaches to a particular activity based on the essential character of the activity or output, rather than to the process by which it occurs. Technological neutrality consists of media neutrality and functional equivalence. Media neutrality seeks to ensure that copyright doctrine evolves to embrace new technologies, preserving copyright not only in the medium in which the work is created but all existing and future media in which the work might be expressed. As long as the creative expression survives the transfer to a new medium, copyright in the work will survive.
Functional equivalence, on the other hand, focuses on what the technology at issue is doing, rather than on the technical modalities of how it is doing it. This leads to interpretations of the Act that give functionally equivalent technologies similar treatment. It also avoids imposing copyright liability on technologies and activities that only incidentally implicate copyright. This case involves an application of functional equivalence.
Broadcast‑incidental copies are those created to achieve a broadcast by providing the necessary technical modalities. In the context of copyright law, their creation cannot be seen as distinct from the core activity of broadcasting. A broadcast‑incidental copy is not transformed into a separate reproduction of the work simply because the technical imperatives of effecting a broadcast require the presence of multiple copies. Broadcast‑incidental copies do not, as a result, attract separate royalties. To conclude otherwise is to doom both technological neutrality and the ability of copyright law to preserve the delicate balance between the rights of copyright holders and the public’s interest in the dissemination of creative works.
SODRAC holds only the reproduction rights in the works in its repertoire. It is not entitled to royalties associated with the broadcasting of those works, which are paid to the Society of Composers, Authors and Music Publishers of Canada (SOCAN). SODRAC is attempting to claim royalties in this case for the method of broadcasting the musical works to the public, despite never before receiving royalties for broadcasting activities.
Sections 30.8 and 30.9 of the Copyright Act were a legislative response to this Court’s holding in Bishop, which was based on a literal interpretation of s. 3(1) (d). It held that the licensing of a performance right did not implicitly authorize ephemeral recordings of the performance for the purposes of effecting the broadcast. These discrete legislative responses to a specific judicial interpretation of the Copyright Act are far from representing the kind of express statutory language needed to displace such fundamental objectives and principles underpinning the Copyright Act as technological neutrality and balance. They were meant to provide greater certainty that certain classes of ephemeral recording are not to attract copyright liability and to maintain technological neutrality, not to be a defining statement on the content of the reproduction right, or which kinds of copies will trigger it.
The Federal Court of Appeal’s suggestion that “more copies mean more value and thus, more royalties” violates technological neutrality by imposing additional copyright liability on the use of more efficient copy‑dependent broadcasting technologies, by erroneously tying the compensation owed to creators of copyrighted works to how efficiently the user exercises the right that was bargained for, and by artificially raising the cost of broadcasting. It also fails to take account of the fact that broadcasters are required to make certain broadcast‑incidental copies in order to comply with CRTC regulations and that the CBC already pays royalty fees for broadcasting rights to SOCAN.
The principle of technological neutrality requires that the interpretation and application of the Copyright Act focus on the essential character of the activity and not on the technical modalities by which it is achieved. Modern digital technologies that are dependent on the creation of incidental copies do not change the essence of the broadcasting activity, and imposing additional fees for such copies raises the cost of broadcasting, an expense the consumer will be made to bear. Attaching copyright liability to incidental copies created as a result of improvements in broadcasting technologies therefore penalizes broadcasters and the public for utilizing new and improved technologies and artificially creates entitlements to compensation for creators that were never intended to be given under the Act.
The majority’s articulation and application of the principle of technological neutrality on the issue of valuation is wholly inconsistent with the established case law in that it ties copyright-holder compensation to actions of the user that are unrelated and irrelevant to the rights held in the protected works, and focuses the inquiry on the value that the technology is creating for the user. The majority proposes two novel factors for the Board to consider when striking a balance between user and copyright-holder interests: (1) the nature of the copyright-protected work’s use in the new technology; and (2) the risks taken and the extent of the investment made by the user in the new technology. While the first factor is consistent with the balance articulated in Théberge, the second is not. If this new second factor is followed to its logical conclusion, users who make a sufficiently large investment or take sufficiently high risks may, by doing so, deprive the copyright holder of any entitlement to compensation for the use of the protected works.
As this Court confirmed in Entertainment Software Association, technological neutrality operates to prevent imposing additional, gratuitous fees on the user simply for the use of more efficient technologies. Focusing the inquiry on the value that the technology is creating for the user, as opposed to the functional result created by the technology, misconstrues technological neutrality. A technological innovation may well create value for the user by increasing efficiencies, driving down costs, or allowing the user to remain competitive. But SODRAC, the copyright holder, is not entitled to be compensated for how efficiently the CBC uses technology to achieve its broadcast.
The question of whether the Copyright Board ought to have imposed royalty fees on the CBC for the creation of incidental copies that arise as a technical part of the digital broadcasting process, is at the heart of the Copyright Board’s specialized mandate and therefore reviewable on a reasonableness standard. Extricating the various components of the Board’s decision and subjecting each to its own standard of review analysis represents a significant and inexplicable change in this Court’s standard of review jurisprudence. It risks creating an unworkable framework for the judicial review of administrative decision‑making and may well be seen as a way to give reviewing courts wider discretion to intervene in administrative decisions, as had been done in the pre‑Dunsmuir era through the use of the “preliminary question doctrine”.
Per Karakatsanis J. (dissenting): There is agreement with Abella J.’s decision on the merits and in the result, but not with her position on the standard of review. Instead, there is agreement with the majority’s conclusion that the correctness standard applies to whether broadcast‑incidental copies engage the reproduction right and that the reasonableness standard applies to the balance of the decisions of the Copyright Board. However, the general approach taken by the majority to their analysis of the standard of review is not endorsed. In this respect, although this Court’s jurisprudence permits the isolation of a particular question of law on an exceptional basis, it does not require a separate standard of review analysis for each issue. An issue‑by‑issue approach, within each decision, unnecessarily complicates an already overwrought area of the law.
Cases Cited
By Rothstein J.
Applied: Théberge v. Galerie d’Art du Petit Champlain inc., 2002 SCC 34, [2002] 2 S.C.R. 336; Entertainment Software Association v. Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 34, [2012] 2 S.C.R. 231; Mouvement laïque québécois v. Saguenay (City), 2015 SCC 16, [2015] 2 S.C.R. 3; referred to: Bishop v. Stevens, [1990] 2 S.C.R. 467; Rogers Communications Inc. v. Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 35, [2012] 2 S.C.R. 283; Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633; Tervita Corp. v. Canada (Commissioner of Competition), 2015 SCC 3, [2015] 1 S.C.R. 161; Smith v. Alliance Pipeline Ltd., 2011 SCC 7, [2011] 1 S.C.R. 160; Alberta (Information and Privacy Commissioner) v. Alberta Teachers’ Association, 2011 SCC 61, [2011] 3 S.C.R. 654; Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190; Performing Right Society, Ltd. v. Hammond’s Bradford Brewery Co., [1934] 1 Ch. 121; Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27; Statement of Royalties to be Collected by CMRRA/SODRAC Inc. for the Reproduction of Musical Works, in Canada, by Commercial Radio Stations in 2001, 2002, 2003 and 2004, decision of the Board, file No. 2001‑2004, March 28, 2003 (online: http://www.cb‑cda.gc.ca/decisions/2003/20030328‑rm‑b.pdf); Statement of Royalties to be Collected by SOCAN, Re:Sound, CSI, AVLA/SOPROQ and Artisti in Respect of Commercial Radio Stations, decision of the Board, July 9, 2010 (online: http://www.cb‑cda.gc.ca/decisions/2010/20100709.pdf); Gosling v. Veley (1850), 12 Q.B. 328, 116 E.R. 891; Ontario English Catholic Teachers’ Assn. v. Ontario (Attorney General), 2001 SCC 15, [2001] 1 S.C.R. 470; Attorney‑General v. Wilts United Dairies, Ltd. (1921), 37 T.L.R. 884; Vigneux v. Canadian Performing Right Society, Ltd., [1943] S.C.R. 348; Hanfstaengl v. Empire Palace, [1894] 3 Ch. 109.
By Abella J. (dissenting)
Entertainment Software Association v. Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 34, [2012] 2 S.C.R. 231; Bishop v. Stevens, [1990] 2 S.C.R. 467; Théberge v. Galerie d’Art du Petit Champlain inc., 2002 SCC 34, [2002] 2 S.C.R. 336; Society of Composers, Authors and Music Publishers of Canada v. Canadian Assn. of Internet Providers, 2004 SCC 45, [2004] 2 S.C.R. 427; Robertson v. Thomson Corp., 2006 SCC 43, [2006] 2 S.C.R. 363; Euro‑Excellence Inc. v. Kraft Canada Inc., 2007 SCC 37, [2007] 3 S.C.R. 20; Society of Composers, Authors and Music Publishers of Canada v. Bell Canada, 2012 SCC 36, [2012] 2 S.C.R. 326; Alberta (Education) v. Canadian Copyright Licensing Agency (Access Copyright), 2012 SCC 37, [2012] 2 S.C.R. 345; Rogers Communications Inc. v. Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 35, [2012] 2 S.C.R. 283; Cinar Corporation v. Robinson, 2013 SCC 73, [2013] 3 S.C.R. 1168; Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27; Council of Canadians with Disabilities v. VIA Rail Canada Inc., 2007 SCC 15, [2007] 1 S.C.R. 650; Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190; Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corp., [1979] 2 S.C.R. 227.
By Karakatsanis J. (dissenting)
Rogers Communications Inc. v. Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 35, [2012] 2 S.C.R. 283.
Statutes and Regulations Cited
Copyright Act, R.S.C. 1985, c. C‑42, ss. 2.4 , 3(1) , 30.7 [ad. 1997, c. 24, s. 18(1)], 30.8 [idem], 30.9 [idem], 66.51, 66.6(1), 70.2, 70.4.
Copyright Modernization Act, S.C. 2012, c. 20 , summary.
Television Broadcasting Regulations, 1987, SOR/87‑49, s. 10(5).
Authors Cited
Convention concernant la télévision et la radio entre la Société du droit de reproduction des auteurs, compositeurs et éditeurs au Canada (SODRAC) et la Société Radio‑Canada, 19 mars 1992, art. 2.
Craig, Carys J. “Technological Neutrality: (Pre)Serving the Purposes of Copyright Law”, in Michael Geist, ed., The Copyright Pentalogy: How the Supreme Court of Canada Shook the Foundations of Canadian Copyright Law. Ottawa: University of Ottawa Press, 2013, 271.
Driedger, Elmer A. Construction of Statutes, 2nd ed. Toronto: Butterworths, 1983.
Gurry, Francis. “The Future of Copyright”, speech delivered at the Blue Sky Conference, Queensland University of Technology, Sydney, February 25, 2011 (online: http://www.wipo.int/about‑wipo/en/dgo/speeches/dg_blueskyconf_11.html).
Hagen, Gregory R. “Technological Neutrality in Canadian Copyright Law”, in Michael Geist, ed., The Copyright Pentalogy: How the Supreme Court of Canada Shook the Foundations of Canadian Copyright Law. Ottawa: University of Ottawa Press, 2013, 307.
Hutchison, Cameron J. “Case Comment: The 2012 Supreme Court Copyright Decisions & Technological Neutrality” (2013), 46 U.B.C. L. Rev. 589.
Hutchison, Cameron J. “Technological Neutrality Explained & Applied to CBC v. SODRAC” (2015), 13 C.J.L.T. 101.
Katz, Ariel. “Commentary: Is Collective Administration of Copyrights Justified by the Economic Literature?”, in Marcel Boyer, Michael Trebilcock and David Vaver, eds., Competition Policy and Intellectual Property. Toronto: Irwin Law, 2009, 449.
Licence authorizing the Canadian Broadcasting Corporation to reproduce works in the repertoire of SODRAC for the period from November 14, 2008 to March 31, 2012, file No. 70.2‑2008‑01, November 2, 2012, revised March 31, 2014, ss. 2.01, 5.03(2) (online: http://www.cb‑cda.gc.ca/decisions/2012/licence‑src‑
modifiee.pdf).
McKeown, John S. Fox on Canadian Law of Copyright and Industrial Designs, 4th ed. Toronto: Carswell, 2012 (loose‑leaf updated 2015, release 4).
Pallante, Maria A. “The Next Great Copyright Act” (2013), 36 Colum. J.L. & Arts 315.
Richard, Hugues G., and Laurent Carrière et al., eds. Canadian Copyright Act Annotated, vol. 3. Toronto: Carswell, 1993 (loose‑leaf updated 2015, release 8).
Syrtash, Veronica. “Supra‑National Limitations on Copyright Exceptions: Canada’s Ephemeral Exception and the ‘Three‑Step Test’” (2005‑2006), 19 I.P.J. 521.
Tussey, Deborah. “Technology Matters: The Courts, Media Neutrality, and New Technologies” (2005), 12 J. Intell. Prop. L. 427.
Vaver, David. Intellectual Property Law: Copyright, Patents, Trade‑marks, 2nd ed. Toronto: Irwin Law, 2011.
APPEAL from a judgment of the Federal Court of Appeal (Noël, Pelletier and Trudel JJ.A.), 2014 FCA 84, [2015] 1 F.C.R. 509, 457 N.R. 156, 118 C.P.R. (4th) 79, [2014] F.C.J. No. 321 (QL), 2014 CarswellNat 808 (WL Can.), setting aside in part a decision of the Copyright Board of Canada, file Nos. 70.2‑2008‑01, 70.2‑2008‑02, November 2, 2012 (online: http://www.cb‑cda.gc.ca/decisions/2012/DecisionSODRAC5andArbitration02‑11‑2012.pdf), [2012] C.B.D. No. 11 (QL), and affirming a decision of the Copyright Board of Canada, file No. 70.2-2012-01, January 16, 2013 (online: http://www.cb-cda.gc.ca/decisions/2013/sodrac-16012013.pdf). Appeal allowed, Abella and Karakatsanis JJ. dissenting.
Marek Nitoslawski and Joanie Lapalme, for the appellant.
Colette Matteau and Lisane Bertrand, for the respondents.
Howard P. Knopf, David Lametti and Ariel Katz, for the interveners the Centre for Intellectual Property Policy and Ariel Katz.
David Fewer and Jeremy de Beer, for the intervener the Samuelson‑Glushko Canadian Internet Policy and Public Interest Clinic.
Casey M. Chisick, Peter J. Henein and Eric Mayzel, for the interveners the Canadian Musical Reproduction Rights Agency Ltd., the Canadian Music Publishers Association and the International Confederation of Music Publishers.
Barry B. Sookman and Daniel G. C. Glover, for the interveners Music Canada, the International Federation of the Phonographic Industry, the Canadian Council of Music Industry Associations, the Canadian Independent Music Association and Association québécoise de l’industrie du disque, du spectacle et de la vidéo.
The judgment of McLachlin C.J. and Cromwell, Moldaver, Wagner, Gascon and Côté JJ. was delivered by
[1] Rothstein J. — Broadcasting a program that uses copyright-protected music engages the right to communicate the work to the public by telecommunication — a right that rests exclusively with the copyright holder for that musical work. Thus, broadcasters must secure a licence to communicate the work. Broadcasting activities are complex, however, and broadcasters often engage not only in the telecommunication of musical works as part of the airing of a program, but also in making copies of programs, and thus of the music incorporated therein, for internal use. Where these copies are made to facilitate broadcasting, they may be described as broadcast-incidental copies.
[2] Making copies of a copyright-protected work implicates the reproduction right, which also rests exclusively with the copyright holder. This case concerns the relationship between broadcast-incidental copies and the reproduction right established by s. 3(1) (d) of the Copyright Act, R.S.C. 1985, c. C-42 .
[3] In 2012, the Copyright Board, in setting the terms of a licence between Canadian Broadcasting Corporation (“CBC”) and SODRAC 2003 Inc. and the Society for Reproduction Rights of Authors, Composers and Publishers in Canada (SODRAC) Inc. (collectively, “SODRAC”) for the 2008-2012 period, held that CBC’s broadcast-incidental copying activity engaged the reproduction right, that a licence for such copies could not be implied from synchronization licences covering the production process, and that CBC required a separate reproduction licence to legitimize its broadcast-incidental copying. The Board further found that the appropriate valuation for this licence was more than nominal, and issued a licence authorizing CBC to reproduce works in the SODRAC repertoire in conjunction with a list of activities, including the production of CBC’s in-house programs and the broadcasting of programs on CBC’s television services and on the Internet: Licence authorizing the Canadian Broadcasting Corporation to reproduce works in the repertoire of SODRAC for the period from November 14, 2008 to March 31, 2012 (online) (“2008-2012 statutory licence” or “2008-2012 licence”), s. 2.01.
[4] It later issued an interim licence to take effect after the expiry of the 2008-2012 licence that extended the terms of that licence on an interim basis, subject to minor modifications. The Federal Court of Appeal upheld both the 2008-2012 licence and the interim licence that followed, subject to minor amendments.
[5] The Board was correct in finding that broadcast-incidental copying engages the reproduction right, consistent with this Court’s decision in Bishop v. Stevens, [1990] 2 S.C.R. 467, and the context of the statutory scheme set out in the Copyright Act . Though this Court’s subsequent decisions in Théberge v. Galerie d’Art du Petit Champlain inc., 2002 SCC 34, [2002] 2 S.C.R. 336, and Entertainment Software Association v. Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 34, [2012] 2 S.C.R. 231 (“ESA”), have refined our understanding of the purposes of copyright law, the central holding in Bishop, that ephemeral copies engage the reproduction right, remains sound. I further agree with the Board and the Federal Court of Appeal that a licence to make broadcast-incidental copies should not be implied from synchronization licences issued by SODRAC.
[6] However, in my respectful opinion, the Board erred in failing to consider the principles of technological neutrality and balance in setting the valuation of this licence. I would remit this matter to the Board for reconsideration of the valuation of the 2008-2012 licence for CBC’s television and Internet broadcast-incidental copies applying the principles of technological neutrality and balance. Because the interim licence that followed was based on the terms of the 2008-2012 licence, I would also set it aside and remit it for redetermination.
I. Facts
[7] The appellant CBC is both a producer and a broadcaster of television programs: it broadcasts its own original programs as well as those that it has licensed or bought from third parties, and it shows these programs on television and the Internet. Where a program contains copyright-protected musical works, CBC must ensure that it has secured all necessary licences for that work in order to reproduce and broadcast the work as part of a television program. Production and broadcasting may implicate both reproduction and the telecommunication rights in a work. This appeal is concerned primarily with the reproduction right established by s. 3(1) (d) of the Copyright Act .
[8] The respondent the Society for Reproduction Rights of Authors, Composers and Publishers in Canada (SODRAC) Inc. is a collective society organized to manage the reproduction rights of its members. Its focus is on French-language music reproduction rights. Its members assign their reproduction rights to the collective society, which then stands in place of individual right holders in negotiations with parties who seek permission to reproduce works in its repertoire. This repertoire comprises the majority of French-language works written by Canadians.
A. Synchronization Copies and Broadcast-Incidental Copies
[9] A producer who wishes to use a musical work in an audiovisual program must incorporate that work into the production copy of the program, a process known in the industry as “synchronization”. The parties do not dispute that the synchronization process is an exercise of the reproduction right, and thus requires a licence if the musical work being incorporated is under copyright. Once the synchronization process is complete, the final product is referred to as a “master” copy. Where the producer is not also a broadcaster, this copy is then passed on once the program has been sold or licensed to a broadcaster.
[10] Once CBC is in possession of the master copy of a program, whether it has been produced in-house or by an independent producer, the master copy is loaded into CBC’s digital content management system, a practice that has become widespread among broadcasters in recent years. Digital systems generally involve the storage of copies as electronic files on hard drives, while older analog systems stored copies on physical tapes. CBC makes use of its digital content management system to perform a number of functions that help prepare a program for broadcast.
[11] These processes result in the creation of several copies, which are at the heart of this appeal. The parties refer to these copies as “broadcast-incidental copies”. Broadcast-incidental copies may be made for several purposes. For example, a copy may be made to reformat the master copy to suit CBC’s technical requirements, or to edit the copy for timing, language or closed captioning purposes. One or more additional copies may also be made to allow for screening of the program by various teams within CBC before broadcast.
B. Licensing Practices
[12] Broadly speaking, reproduction licences may take two forms: transactional or blanket. In a transactional licence, a prospective user seeks out the holder of the reproduction right in a particular work that the producer wishes to include in a program and negotiates an individual licence agreement. Blanket licences are negotiated between a producer and a collective society, and grant the producer the right to reproduce all works within the collective’s repertoire, subject to the negotiated terms of the licence.
[13] Parties negotiating a reproduction licence may also choose to structure it as a “through-to-the-viewer” licence, in which the right holder grants the authority to make all reproductions necessary to take a program from production through to its ultimate broadcast to viewers. Alternately, they may choose to structure it as a “bare” synchronization licence, which grants the authority to make synchronization copies but does not cover additional copies made to facilitate broadcasting: decision of the Copyright Board, file Nos. 70.2-2008-01, 70.2-2008-02, November 2, 2012 (online) (“Statutory Licence Decision”), at paras. 15-16. As will be discussed below, however, CBC disputes whether bare synchronization licences are possible, or whether they must include an implied licence to make broadcast-incidental copies.
[14] Where CBC acts as a producer, its practice has been to seek transactional synchronization licences from individual right holders where possible. When synchronizing French-language music, SODRAC exercises collective authority over the substantial majority of such works, and CBC has used blanket licences. Where CBC acts as a broadcaster of third party programs, it does not seek synchronization licences, as those licences will have been obtained by the producer before the final master copy of the program is handed over to CBC.
[15] The issues in dispute on appeal arise in part from the history of dealings between CBC and SODRAC with regard to reproduction licences. It is helpful to review this history in understanding the arguments presented by both parties.
[16] In 1990, this Court, per McLachlin J. (as she then was), issued its decision in Bishop, holding that “the right to broadcast a performance under s. 3(1) of the Act does not include the right to make ephemeral recordings for the purpose of facilitating the broadcast”: p. 485. Thus, reproductions made to facilitate broadcasting need to be authorized separate from the authorization to broadcast a performance to the public.
[17] Following Bishop, in 1992, CBC and SODRAC first entered into a negotiated licence agreement permitting CBC to make synchronization copies and other reproductions of works within the SODRAC repertoire: Convention concernant la télévision et la radio entre la Société du droit de reproduction des auteurs, compositeurs et éditeurs au Canada (SODRAC) et la Société Radio-Canada, March 19, 1992 (“1992 Licence”), A.R., vol. IV, at p. 1. This agreement did not disaggregate synchronization copies and broadcast-incidental copies, but rather granted to CBC the authority to make any copies of works in SODRAC’s repertoire in connection with its broadcasting activities: 1992 Licence, art. 2. The 1992 Licence was thus a blanket, through-to-the-viewer licence. This licence also extended upstream authorization to third party producers to make synchronization copies in works commissioned for broadcast by CBC: Statutory Licence Decision, at para. 72.
[18] In 1998, SODRAC began to differentiate between synchronization copies made by producers and copies for other purposes made by broadcasters. It did so by announcing its intent to require producers to obtain synchronizatio