Key 2004 decision on ‘caching’ raised in Supreme Court’s music downloading case

A historic 2004 Supreme Court decision that dealt with the copyright liability of online caching is being raised in a key court battle on whether online music services should have to pay an additional royalty for the download of songs. The argument is found in documents filed with the Supreme Court earlier this month by the Canadian Internet Policy and Public Interest Clinic (CIPPIC). The CIPPIC submission points to historic Supreme Court ruling in a 2004 case, SOCAN v. CAIP, which saw the Society of Composers, Authors and Music Publishers of Canada (SOCAN) pitted against Internet service providers (ISPs) on issues of copyright law. Often known simply as the Tariff 22 case, the decision was part of a triad of Supreme Court decisions that established early precedents on how copyright law would apply to Internet use in Canada. Among precedents established in that case, SOCAN v. CAIP found that ISPs were not liable under copyright law for data stored in their caches, because caching was used solely to speed up Internet services while remaining content-neutral. “‘Caching’ is dictated by the need to deliver faster and more economic service, and should not, when undertaken only for such technical reasons, attract copyright liability,” the court wrote. CIPPIC argues in recently filed court documents that any telecommunication that takes place when music is downloaded is “purely technical, required for the functionality of the technology," and should be granted an intermediary extension such as those granted to ISPs for caching. CIPPIC is applying as an intervener in one of two cases before the Supreme Court that will decide whether downloading musical and theatrical works constitutes the communication of a performance through telecommunications and whether downloading should be subject to a performance right royalty under the Copyright Act. Music services such as iTunes, or Bell Canada's and Telus Communication Co.'s online music services, now pay a reproduction right to distribute music online.The companies argue that charging for an additional performance right on music downloads is excessive and that it was not intended under the Copyright Act. A pair of earlier Federal Court of Appeal decisions have upheld the right of copyright collective SOCAN to seek performance rights royalties on musical and theatrical downloads. The appeals court sided with earlier Copyright Board rulings that established those rights, and found that section 3(1)(f) of the Copyright Act granted copyright holders the sole right “to communicate the work to the public by telecommunication.” Those decisions of the appeals court are now under appeal at the Supreme Court. SOCAN is serving as the respondent in the cases. A hearing is scheduled at the Supreme Court on Dec. 6. In its submission to intervene in one of those cases, CIPPIC argues the online distribution of music likely “involves no communication to the public by telecommunication,” and if it does, it does so only “in a manner that is merely incidental to the acquisition of a copy of a recording.” CIPPIC writes that “the correct and only reasonable interpretation of the transaction is to regard online distribution as a reproduction that does not invoke copyright owners’ right under para. 3(1)(f) of the Copyright Act.” “I think was paramount,” Tom Copeland, president of the Canadian Association of Internet Providers (CAIP), said in a phone interview. He said the decision established a number of precedents for ISPs that courts and regulators have maintained since. “Caching of any sort is a technological enhancement to the user experience,” Copeland said. “Digital content is digital content—whether that’s music, video or whatever.” The CIPPIC submission also argues that it would be economically inefficient to enable copyright holders to slap additional tariffs on works that already pay reproduction fees. “In crassly economic terms it would be as inefficient to overcompensate artists and authors for the right of reproduction as it would be self-defeating to undercompensate them,” CIPPIC writes, citing the 2002 Supreme Court decision in Théberge v. Galerie d'Art du Petit Champlain Inc. CIPPIC argues that “o hold that the online sale and distribution of recorded performances of musical works amounts to the communication to the public by telecommunication … would have the effect of overcompensating authors.” In similar requests to the court to serve as interveners, Apple Inc. and Cineplex Entertainment LP question previous decisions that equated music downloads with public communication over telecom networks. “Fundamentally, the Federal Court of Appeal has failed to appreciate the dual nature of Internet as both a delivery mechanism and a broadcast technology,” Cineplex writes in its submission. “In this, although the broadcast or streaming of a musical or dramatic work over the Internet may be a ‘communication to the public,’ the point-to-point delivery of the same work to an individual by download over the Internet is not.” Apple, Cineplex, and CIPPIC are supporting appellants Bell Canada, Rogers Communications Inc., Shaw Communications Inc. and Telus in challenging a lower court finding that allows for performance royalties on music downloads (Supreme Court case 33922). Cineplex has also submitted a request to intervene in a related but separate case that is challenging a decision to allow performance royalties on video game downloads. The Entertainment Software Association of Canada (ESA) is the appellant in that case (No. 33921). Apple and Cineplex also argue that the Federal Court of Appeal failed to offer a technology-neutral interpretation of section 3(1)(f) of the Copyright Act because performance tariffs are not applied to “bricks and mortar” operations that sell music reproductions, such as retail music stores. If allowed to stand, Apple argues, additional performance royalties applied to online music sales would work to the benefit of “‘free’ illegal services that do not pay rights holders at all” and could negatively impact “Canadians’ ability to take advantage of new and efficient means of disseminating copyrighted works.” Copyright collective CMRRA-SODRAC Inc. (CSI) has requested to intervene in the case in support of SOCAN, and in its submission takes issue with the appellants’ argument that a performance royalty would unfairly burden download services. As an organization that manages the reproduction rights of many Canadian musicians, authors, composers and publishers, CSI argues that applying two separate tariffs when appropriate is similar to charging a person twice for committing two separate torts simultaneously. Referring to a 1990 Supreme Court ruling in Bishop v. Stevens, the collective noted that Canada’s highest court has already found “that the reproduction and communications rights are separate, often owned by separate persons, administered through separate channels, subject to separate legal and regulatory regimes and warranting separate compensation.” “ontrary to the Appellants’ position, compensation for the use of the reproduction right is irrelevant to the question of whether or not the communication right is engaged or should be paid for,” the CSI argues in its submission. The CSI said it is not commenting because the issue is before the court. SOCAN has previously said that the rights won through lower court decisions provide an important support mechanism for songwriters and music publishers. In arguments before the Copyright Board, the collective society has said its tariff proposals are justified and that they reflect distinct music uses on the Internet. nkyonka@thewirereport.ca

Key 2004 decision on ‘caching’ raised in Supreme Court’s music downloading case

Broadcast | August 26, 2011

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