Supreme Court reins in copyright fees on music, videos, printed matter

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A series of rulings from the Supreme Court of Canada today could have an impact on everything from grade-school handouts to the cost of downloading music. The top court decided last year to consider five different copyright-related cases at once. THE CANADIAN PRESS/Sean Kilpatrick

OTTAWA - The Supreme Court of Canada has reined in the application of copyright fees levied on music, movies, video games and printed materials that Canadians download and copy in different ways.

The rulings could result in big savings for school boards — but music consumers shouldn't hold their breath.

The top court examined five different cases at once that touched on tariffs set by the Copyright Board.

All the cases pitted the societies that collect fees on behalf of creators against the distributors or users of the copyrighted materials.

One of the biggest cases involved ministers of education and school boards from across the country versus Access Copyright — the body that collects royalty fees for publishers. The two sides had butted heads at the Copyright Board over how much schools had to pay for the right to photocopy parts of books for students.

When students copy material for private study or research, it's considered "fair dealing" under the Copyright Act and doesn't always trigger fees.

In a 5-4 decision, the Court found that the Copyright Board had incorrectly treated teachers differently when they photocopied materials for their students, "driving an artificial wedge into these unified purposes of instruction and research/private study."

"There is no separate purpose on the part of the teachers in this case," wrote Justice Rosalie Abella. "They have no ulterior or commercial motive when providing copies to students."

Abella wrote that there is no evidence of a link between photocopying short excerpts of a book and the decline in textbook sales.

The Copyright Board will have to examine the fees again in light of the decision, but it could have a positive financial impact on educational institutions that pay millions annually to publishers through Access Copyright.

"The opportunity is there to now save the taxpayers tens of millions of dollars that could be put to better uses ... if this decision is taken advantage of," said copyright lawyer Howard Knopf, who was part of a group that intervened in the case.

Roanie Levy, chief counsel for Access Copyright, emphasized that the ruling is just one factor the Copyright Board will take into account when it is negotiating fair licences and fees.

She pointed to the example of a publisher who tailors books specifically for a province's needs, only to see the school boards there buy fewer copies than they have students. Teachers sometimes then copy portions for the class.

"Even after the Supreme Court of Canada decision, we still do not know whether these uses (of the material) are fair or not," said Levy.

The four other cases involved the layering on of fees for works based on the way they are transmitted to the consumer.

The court decided unanimously that there should be no copyright fees levied on cable companies or other digital providers when music is downloaded, but that artists should be compensated when it is streamed online.

Eric Baptiste, CEO of SOCAN, said the body representing music songwriters is disappointed with the rulings that did not compensate the creators.

"We have only one objective at SOCAN, and that's to protect the rights of our authors, composers and editors, and every issue counts," said Baptiste.

A lawyer for Rogers Communications Inc., one of the digital service providers that went up against SOCAN, said the industry is now owed roughly three cents for every song downloaded in Canada between 1996-2006.

But Jay Kerr-Wilson said it's uncertain whether consumers will see any of that back, given that music juggernaut iTunes charges customers a flat $0.99 (or more) per song.

"The pricing for online services is largely driven by competitive factors, rather than cost issues. It's a very low-margin business, so I don't want to guarantee that all the prices are going to drop by three per cent," said Kerr Wilson, of the firm Fasken Martineau.

Alberta Education Minister Jeff Johnson issued a statement expressing satisfaction that the court clarified that teachers can copy short excerpts of copyright-protected work for students in their classes.

"I’m pleased that the Supreme Court of Canada has provided much needed clarity for teachers about the kinds of resources they can copy and share with students," Johnson said in the statement.

More problematic is the fact the whole issue might wind up in court again. New changes to the Copyright Act, passed a few weeks ago in Parliament, have muddied the waters again on whether simply transmitting material should trigger fees.

The music downloading and streaming decision was linked to another one that dealt with software companies that sell their video games online. The court found in a 5-4 decision that those firms shouldn't pay royalties for the music that's featured in those video games every time a consumer downloads a product online.

"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," wrote Abella and Justice Michael Moldaver.

"ESA (Entertainment Software Association) has already paid reproduction royalties to the copyright owners for the video games."

Finally, cable and other Internet providers should not have to pay fees when music downloaders listen to previews of songs. The court found unanimously that those previews constituted research and therefore did not infringe the Copyright Act.

"Unless a potential consumer can locate and identify the work he or she wants to buy, the work will not be disseminated," wrote Justice Abella.

"Short, low-quality previews do not compete with, or adversely affect, the downloading of the works themselves. Instead, their effect is to increase the sale and dissemination of copyrighted musical works."

Note to readers: This is a corrected version. A previous story wrongly attributed a quote to Justice Louis LeBel