Three recent Canadian Supreme Court decisions involving the Society of Composers, Authors and Music Publishers of Canada (
SOCAN) have tested the application of the fair dealing provisions in the Canadian
Copyright Act, R.S.C 1985, c. C-42 to relatively new technologies including music streaming, internet sales of video games and free previews of musical works on music publishing sites. These cases test the boundaries of the principle of technological neutrality and raise interesting issues that Australian courts may well need to consider at some stage.
In most common law countries, including Australia and Canada, fair dealing is a statutory exception or defence to infringement of copyright and where it applies, no royalties need be paid to a copyright owner. Under both the Canadian and Australian legislation, there are two hurdles to establishing fair dealing, the first being that an action that would otherwise constitute copyright infringement must be for one of the purposes prescribed under the fair dealing provisions of the legislation. Some of the permitted purposes in Canada and Australia are research or private study, criticism, review, news reporting and parody or satire.
The second limb involves an assessment of whether the use of the copyright work was 'fair', a question of fact determined by considering factors including the nature of the work and the effect the dealing has on it, as well as the purpose, character and amount of the dealing and whether there are any alternatives to the dealing. This limb goes to the heart of the purpose of fair dealing, which is to strike a balance between the private rights of a copyright owner and the public interest in encouraging the dissemination of creative works.
While the concept of fair dealing appears to be relatively straightforward, the recent Canadian decisions illustrate the creativity courts sometimes need to adopt to fit new forms of technology into the existing legal framework.
Canadian decisionsIn
SOCAN v Bell Canada 2012 SCC 36 (
Bell Canada), the Supreme Court of Canada considered whether an online music publisher had infringed copyright by allowing potential purchasers to stream short, low quality previews of musical works for free without purchasing and downloading the work. The holders of copyright in the musical works were entitled to receive royalties when the works are purchased and downloaded; however SOCAN sought additional compensation in respect of the previews.
Citing the landmark 2004 Canadian Supreme Court decision
CCH Canadian Limited v Law Society of Upper Canada [2004] 1 SCR 339 (
CCH) in which it was held that there is a low threshold to meet the first limb of fair dealing, the majority ruled that the previews fell within the scope of the 'research' purpose, giving the term a large and liberal interpretation not limited to its dictionary meaning. They held that in listening to previews prior to downloading a musical work, consumers were conducting market research.
Again following the
CCH decision, the majority in
Bell Canada stated that the 'heavy hitting' of fair dealing analysis was to be done in relation to the second limb – establishing whether the dealing was 'fair'. In this case, the majority concluded that the dealing was fair, based on the fact that the previews were short and of poor quality, and were streamed, meaning no copy was stored on the consumers' computers. They were also persuaded by the fact that they could see no alternative method of conducting market research that would be as effective in demonstrating what the musical work sounds like as listening to a section of it.
A crucial point was the majority's decision that in considering the 'amount of dealing factor', the assessment should be based on the length of each individual preview or clip in proportion to the overall musical work, and not on the total number of previews that a particular consumer had listened to. Although the majority did not say as much, their reasoning on this point appears to be an application of the principle of technological neutrality, as the assessment of the proportion of work here is analogous to the established law in both Canada and Australia that when pages or chapters of a published literary work are copied, the proportion of the work dealt with determines whether copyright has been infringed.
The issue in the second case,
Rogers Communications Inc. v Society of Composers, Authors and Music Publishers of Canada 2012 SCC 35 (
Rogers Communications), was the distinction in copyright law between a copyright holder's exclusive right to
communicate or broadcast a work
to the public, and their exclusive right to
reproduce that work. The case was an appeal from a decision of the Canadian Copyright Board to impose tariffs on online music services that offer downloads and on-demand streams of musical works.
By the time of this appeal, it was established that offering music downloads gives the copyright owner a right to claim royalties, so the question was whether enabling consumers to stream musical works amounts to communicating those works 'to the public'. The appellant argued that streaming, which is initiated by individual consumers, constitutes a communication of the work streamed to a single individual and therefore does not infringe copyright. They likened their business model to the factual scenario in
CCH, which involved the Canadian Great Library faxing copyright works to individual lawyers on request, a service which was found not to constitute a communication to the public as the communications emanated from and were received at single points.
The majority in
Rogers Communications, however, rejected the analogy to
CCH and instead likened streaming musical works to traditional push methods of broadcasting such as radio, holding that it is irrelevant whether the members of the public to whom a work is communicated receive it simultaneously or at different times in different places, or whether the consumer or the online music service initiates the communication. Where there is a series of repeated transmissions, each transmission must be viewed in the broader context of all the transmissions. The majority pointed out that if this were not the case, the method of communication chosen would determine whether the communication was to the public, and would result in all interactive communications being excluded from the scope of copyright law. The principle of technological neutrality required that these kind of arbitrary results be avoided.
The third case,
Entertainment Software Association v SOCAN 2012 SCC 34 (
ESA), was also an example of the application of the principle of technological neutrality to a new method of dealing with copyright works. The case concerned the sale of video games online by ESA, an association representing a coalition of video games publishers and distributors who already had the right to sell copies of video games in stores. The claim was again brought by SOCAN, this time in respect of copyright musical works contained in the video games, for which royalty payments for
reproduction when the games were sold had already been agreed.
SOCAN contended, and the Copyright Board at first instance accepted, that an additional tariff should be applied for the
communication of those musical extracts when the games were sold online as opposed to in a store or by mail. The Supreme Court rejected this argument and ruled that the exclusive right to communicate is concerned with performances, not with communications that result in a permanent copy being stored. Citing the principle of technological neutrality, they held that it was irrelevant whether the games were sold in a store or delivered via the internet, as the sales were reproductions in each case. The internet should be seen simply as a 'technological taxi' enabling the delivery of a copy of the same work.
LessonsOf course, Australian courts will not be obliged to follow the Canadian lead in comparable cases. However the similarities between Canadian and Australian copyright law and the topical nature of these decisions certainly make them interesting precedents to consider.
We think it unlikely that Australian courts would reach the same conclusion as the majority in
Bell Canada, as Australian courts have previously taken a restrictive view of the research or study permitted purpose. The Federal Court, for example, ruled in
De Garis v Neville Jeffress Pidler Pty Ltd (1990) 37 FCR 99 that 'study' and 'research' are limited to their dictionary meanings, which gives the terms a more traditional, academic slant.
The decisions in the
Rogers Communications and
ESA fit more easily with the way in which courts and legislatures in common law jurisdictions have previously adapted the law of fair dealing to fit earlier technological developments, such as radio broadcasting and films.
