Supreme Court to rule on copyright royalties for downloads

A number of battles between songwriters and music publishers and internet giants, including Apple iTunes, over copyright royalties will be settled by the Supreme Court of Canada today.

The top court is issuing decisions in five different copyright-related cases, and in three of them, the Society of Composers, Authors and Music Publishers (SOCAN) is fighting to collect royalties on music heard and downloaded over the internet.

SOCAN is one of several organizations that collect fees from internet service providers, broadcasters and other businesses and distribute them to members. The Copyright Board of Canada, which approves the fees, currently allows SOCAN to collect a tariff for the reproduction of work and for the communication of that work to the public via the internet.

Service providers including Rogers Communications, Bell Canada, Telus Communications and Shaw Cablesystems argue they shouldn't have to pay both tariffs. They argue that downloading does not constitute the communication of protected work to the public, according to definitions in Canada's copyright legislation and to previous court decisions.

They appealed the Copyright Board's decisions on tariffs to the Federal Court of Appeal and lost, and the cases were then appealed to the Supreme Court.

"Music enhances life and those who create music should be fairly compensated for their talent and hard work," SOCAN's CEO Eric Baptiste said in an interview Wednesday.

The telecommunications companies have argued that imposing another fee creates a barrier to the advancement of Canada's digital economy and could discourage instead of enhance the public's use of the internet.

They said that overly broad interpretations of copyright rules could impede the development of the online marketplace and "stifle innovation in Canada."

They also argue that it's consumers who pay the ultimate price when SOCAN is allowed to collect more royalties.

"If SOCAN is entitled to be paid royalties for downloads then essentially it means someone is going to have to bear the cost of this and ultimately it means that costs are going to be passed on to consumers," said Barry Sookman, a lawyer with McCarthy Tetrault who acted for the Entertainment Software Association in one of the cases.

The ESA is the appellant in one of the cases where the downloading of video games is at issue. The association argued that downloading a game is no different than buying it at a store and that SOCAN therefore isn't entitled to a royalty for it. Music in a video game isn't played while the game is being transmitted to someone's computer and the musical work isn't communicated in any way to the public, the ESA argued.

Sookman said songwriters and composers are already compensated for their work through the reproduction tariff. That tariff is collected by another copyright organization, not SOCAN.

Royalty sought for iTunes song samples

If the Supreme Court overturns the previous decisions on Thursday, it theoretically means the online music and video game providers would stop paying SOCAN more money and could drop prices for customers. But there's no guarantee that would happen, according to Sookman.

SOCAN says it is acting on behalf of consumers by collecting royalties for the lyricists, composers and music producers it represents.

"We believe that we are on the consumers' side because what consumers want is access to music, access to a variety music, new music not just things from the past and it's very important that people who are in this trade are compensated," Baptiste said.

While SOCAN is fighting to hold on to the royalties it currently collects, it's also asking the Supreme Court to weigh in on whether it should be paid by Apple iTunes and other online music retailers that have previews or samples of songs on their websites. 

SOCAN argues that making previews of musical work available online is a commercial activity that deserves to be compensated. But the Copyright Board sided with Apple Canada Inc., and the other companies and said that when potential customers listen to a preview it amounts to research and is allowed under copyright laws. SOCAN wants that ruling overturned.

Another important case that the Supreme Court will decide on Thursday is related to educational institutions and their use of copyrighted material.

All of these decisions come just weeks after Parliament passed Bill C-11, the controversial copyright reform legislation. It adds new rights for copyright holders and exceptions, and much of it is aimed at updating copyright rules to deal with the internet.