Supreme Court dismisses $45M music ‘performance’ royalty for soundtracks

The Supreme Court of Canada put to rest copyright collective Re:Sound's proposed tariff on the “performance” of music in movie and TV show soundtracks. In a unanimous decision Thursday penned by Justice Louis LeBel, the court dismissed the group’s appeal in Re:Sound v. Motion Picture Theatre Associations of Canada (case No. 34210), and denied its request to collect tariffs from broadcast distributors for television broadcasts. The decision upheld earlier decisions by the Copyright Board and the Federal Court of Appeal that had rejected Re:Sound’s application for two new tariffs on sound recordings contained in TV shows (tariff 9) and movies (tariff 7). The court said the copyrighted music in soundtracks could not be afforded separate performance rights where the rights to use those sound recordings have already been licensed. The question before the court was whether SOCAN could also collect royalties under section 19 of the Copyright Act for the “performance” of sound recordings in movies and TV shows when they are aired. The court heard the case in December. “he Board was correct that ‘soundtrack’ includes pre-existing sound recordings and that such recordings are excluded from the definition of ‘sound recording’ when they accompany a cinematographic work,” the court said. “This interpretation of ‘soundtrack’ is consistent with the scheme of the Act, Parliament’s intention, and Canada’s international obligations.” A group of major broadcast companies, Rogers Communications Inc., Shaw Communications Inc., Bell ExpressVu (owned by BCE Inc.) Cogeco Cable Inc., Eastlink (owned by Bragg Communications Inc.), Quebecor Media Inc., Telus Corp., and CBC/Radio-Canada, and the Canadian Association of Broadcasters (CAB) had joined the theatre association to fight Re:Sound’s appeal to the court. Re:Sound estimated that its proposed tariffs would draw annual royalty payments of about $45 million. The CAB wrote in a factum to the court that “this estimate seems to be low.” Gabriel Van Loon, a lawyer with Van Loon Simmons Professional Corporation who represents the CAB, said in a phone interview that the CAB is pleased with the decision, which he called “pretty significant.” “It’s really hypothetical to try to determine how much this tariff could have been worth, but it likely would have been worth more than that ,” he said. Van Loon said Re:Sound could have applied for a similar tariff for soundtracks transmitted over the Internet had the broadcasting tariff been approved. He said the issue has been “put to rest” for now but cautioned that “a whole slew of new” copyright cases could come before the courts under federal copyright bill C-11, which received royal assent June 29. "It puts it to rest based on interpretation of the current wording of the Copyright Act," he said. “It’s inevitable that flowing out of Bill C-11 you’re going to see a whole new round of copyright legal battles.” In a statement Thursday, Ian MacKay, Re:Sound’s president, said it seems “incongruous that songwriters should be compensated when their work is broadcast on TV and in motion pictures, while the actual performers of the recordings are not.” He added: "That being said it is the Supreme Court's role to interpret the law as it exists, not as it should be. Unfortunately, Canada's copyright law has today been found to put Canadian recording artists and record companies at a disadvantage in the international marketplace." The Re:Sound release said songwriters and publishers, artists (including featured performers, background players, session musicians, etc.) and record companies “will continue to be shut out from compensation” as their recordings contribute to the success of films and TV programs. “Today's Supreme Court decision has far-ranging implications—while many developed countries already compensate creators when their music is played in audio-visual media, Canada will continue to deny its artists and record companies similar remuneration,” the release said. Under the decision, rights holders will continue to be compensated through licensing agreements for TV shows and movies. Re:Sound had argued the Copyright Act’s exception for soundtracks was intended to combine the rights of visual and audio features in a cinematographic production together and to protect them as a “cinematographic work.” It said the exclusion applied to the aggregate of sounds and not each individual sound recording included in the film or TV production. “In the appellant’s view, the exclusion from the definition ensures that a soundtrack is treated as part of a cinematographic work and is not protected separately unless the soundtrack does not accompany the cinematographic work,” the court wrote. “Thus, the exclusion has no impact on a pre-existing sound recording that is subsequently incorporated into a movie soundtrack, which remains a sound recording even where the soundtrack accompanies the movie.” The Supreme Court said Parliament would have laid out a condition in the Copyright Act if had it intended the exclusion to be read this way. The court pointed to a Dec. 3, 1996 meeting of the House Standing Committee on Canadian Heritage, in which Jeff Richstone, a lawyer with the Heritage Department, discussed plans to amend the definition of a sound recording. The court rejected Re:Sound’s argument that Canadian copyright laws are required to offer compensation for music in soundtracks under article 12 of the Rome Convention, which says royalties should be paid to performers or producers of phonograms that are “used directly for broadcasting or for any communication to the public.” The court also dismissed arguments related to other jurisdictions applying copyright tariffs to soundtracks, stating that “significant differences exist between Canadian copyright legislation and the foreign legislation” on which those tariffs are based. nkyonka@thewirereport.ca

Supreme Court dismisses $45M music ‘performance’ royalty for soundtracks

Broadcast | July 12, 2012

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