T.24 - SOCAN Response to Appn ToVary, September 10, 2012 Ltr to Gilles McDougall-OTT_LAW-3299187-V5

7/30/2019 T.24 - SOCAN Response to Appn ToVary, September 10, 2012 Ltr to Gilles McDougall-OTT_LAW-3299187-V5

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D. Lynne WattDirect 613-786-8695Direct Fax 613-788-3509

[email protected] No. 03370632September 10, 2012

VIA E-MAIL

Mr. Gilles McDougallSecretary GeneralCopyright Board of Canada56 Sparks StreetSuite 800Ottawa, ON K1A 0C9

Dear Mr. McDougall:

Re: SOCAN Tariff 24 (2003-2005 and 2006-2013) Ringtones and RingbacksApplication to Varyfiled by Bell Mobility et al.

This constitutes SOCANs response to the submissions filed by the Applicants on August 1, 2012,with supplementary submissions filed on August 24, 2012, in support of their application to vary theBoards decisions of August 18, 2006 and June 29, 2012, certifying SOCAN Tariff 24 (2003-2005)and Tariff 24 (2006-2013), respectively.

While styled as an application to vary, the application is, in fact, an application to rescind and

revoke the two certified tariffs, on the basis of the Supreme Court of Canadas decisions inEntertainment Software Association v. Society of Composers, Authors and Music Publishers ofCanada, 2012 SCC 34 (the ESA Decision) and Rogers Communications Inc. et al. v. SOCAN,2012 SCC 35 (the Rogers Decision). In addition, the Applicants have unilaterally ceased payinglicence fees under Tariff 24 (a fact that is not mentioned in their Application) and are, in effect,seeking a declaration from the Board in order to insulate them from the risk of having to paystatutory damages.

SOCAN submits that the Board is the best forum to deal with the matter tabled by the Applicants,that the Board should entertain the application but should dismiss it for the reasons set out below.

Summary of submissions

1. SOCAN submits that the ESA Decision can have no retroactive effect on Tariff 24 for the period2003 to 2005, i.e. the tariff that was confirmed to be valid by the Federal Court of Appeal (FCA) in2008 (with leave to appeal to the Supreme Court of Canada denied). The Applicants are precluded,because of the doctrine of res judicata, from applying to the Court to overturn the Boards decisionof August 18, 2006 on Tariff 24 (2003-2005). SOCAN submits that they should not be permitted tomake a collateral attack on that same decision under the guise of material change. Public policyrationales underlying the doctrine ofres judicata, such as certainty and finality of judgments, should


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preclude any party from attempting to re-litigate spent decisions (i.e. decisions that are out of thesystem) when the state of the law changes, whether by legislative amendment or by a judicialdecision. To rule otherwise would have untenable consequences as it would make all priordecisions of a Tribunal (or a court) subject to attack whenever there is a change in the law.

There are several important differences between the Supreme Courts decisions in ESA and Rogerswhich invalidated Tariff 22 in respect of downloads of videogames and musical works for the period1996-2006 and the Applicants attempt to retroactively overturn a six year old decision of the Board.Tariff 22 for the years 1996-2006 was directly in issue before the Supreme Court in ESA andRogers. By contrast, the Boards decision of August 18, 2006 on Tariff 24 (2003-2005) has alreadybeen reviewed by the FCA and upheld, with leave denied by the SCC. Tariff 24 (2003-2005) cannotsubsequently be attacked.

For the same reason, the Boards decision of June 29, 2012, certifying SOCAN Tariff 24 (2006-2013), is immune from attack. The Applicants had the statutory right to seek judicial review of theBoards decision but did not do so within the time permitted under the Federal Courts Act. Thatdecision is therefore immutable.

In the alternative, if the release of a Supreme Court of Canada decision or an amendment to theCopyright Actcould amount to a material change, such a change should only take effect from thedate of the material change in this case, July 12, 2012.

2. SOCAN submits that the ESA and Rogers Decisions in respect of Tariff 22 do not amount to amaterial change in respect of the Tariff 24 decisions of the Board. The factual bases upon which theESA Decision was made in respect of the download of videogames, and subsequently applied inRogers in respect of the downloads of full track musical works, do not apply equally to ringtonesand ringbacks.

In the alternative, there is not sufficient evidence to conclude definitively that this is the case,

particularly in the case of ringbacks which were not even the subject of the Boards 2003-2005decision and in respect of which no evidence was filed. The Board should be extremely cautious,when asked to apply a decision from one context to another, to ensure that the facts are identicaland to ensure that it has sufficient evidence before it to make that decision.

It is open to the Applicants, the next time there is a Tariff 24 hearing, to lead evidence as to whyESA should be applied to ringtones. SOCAN would have the opportunity to ask interrogatories, tofile evidence on the issue and to challenge the evidence filed by the Objectors.

3. With respect to the Boards June 29, 2012 decision on Tariff 24 (2006-2013), that decisioncertified a tariff that was proposed by SOCAN and the Applicants (as signatories to the agreementthe parties had signed). It was open to the parties to incorporate a material change provision but

they chose not to do so.

4. Finally, if the Board were to conclude that the ESA and Rogers Decisions do amount to amaterial change sufficient to call into question their decisions in respect of Tariff 24, SOCANsubmits that the Board should exercise its discretion not to interfere because of the imminentcoming into force of Bill C-11 which will restore SOCANs right to collect royalties for downloads withthe introduction of the making available right (MAR).


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Background

A tariff for ringtones was first approved by the Copyright Board in 2006 for the years 2003-2005.That decision was the subject of judicial review in the FCA, where the users (many of whom are thesame companies as the Applicants in this matter) took the position, among others, that the Internetdelivery of a ringtone did not constitute a communication within the meaning of section 3(1)(f) ofthe Copyright Act. The FCA dismissed the application (CWTA) and, subsequently, the SupremeCourt of Canada dismissed the users application for leave to appeal.

In June 2010, SOCAN and the Tariff 24 Objectors reached an agreement on the royalties to be paidfor ringtones (and ringbacks) for the period 2006 to 2013, and asked the Board to approve the tariffin accordance with that agreement. The Board certified the tariff, as requested by the parties, onJune 29, 2012.

Shortly thereafter, the ESA Decision was issued on July 12, 2012. The majority in ESA referred tothe CWTA decision and stated (incorrectly in our submission) that CWTA had not examined thelegislative history behind the term communicate or the connection between communication and

performance. 1 While the majority decided that the download of videogames and full-length musicalworks were not communications, the majority did not expressly overturn CWTA.

CWTA is subject to the doctrine ofres judicata

The doctrine ofres judicata is a fundamental doctrine of the justice system.2 The SCC has definedthe doctrine as something that has clearly been decided and has passed into a matteradjudged.3 Therefore, a final judgment concludes the issues between parties.4

The effect of the doctrine is that when any possibility to appeal a decision has lapsed, that decisionis final as between the parties, on that particular set of facts. Unless retroactive legislation isadopted, the parties have no recourse to substitute a decision even where future cases change the

interpretation of a statute, or even if the statute itself is amended, repealed or struck because it isunconstitutional.

Res judicata is grounded on several principles and policy rationales. Public policy dictates that it isin the interest of the public that an end be put to litigation. There is a social necessity requiring thefinality and validity of judgments, on the basis that adjudicated issues are received as the truth.5

Res judicata is also based on the individual right that no one should be twice vexed by the samecause.

1The fact that the FCA in CWTA did not expressly refer to the legislative history of s.3(1)(f) in its written reasons does not

mean that it did not consider it. Both the appellants CWTA, Bell and TELUS, and the respondent SOCAN provideddetailed argument in their written facta about the legislative history of the provision and made submissions in oralargument on the point.2

R. v. Van Rassel, [1990] 1 S.C.R. 225 at 238.3

R. v. Riddle (1979), 48 C.C.C. (2d) 365 (S.C.C.). at 369.4

Donald J. Lange, The Doctrine of Res Judicata in Canada, 3rd

ed. (Markham: LexisNexis, 2010) at p. 4-5; Clark v.Phinney(1896), 25 S.C.R. 633 at 642-644.5

Toronto (City) v. Canadian Union of Public Employees, Local79, [2003] S.C.J. No. 64 at para. 55; Roberge v. Bolduc,[1991] 1 S.C.R. 374 at 402; Minott v. OShanter Development Co., (1999), 42 O.R. (3d) 321 (C.A.) at 329; Childrens AidSociety of the Niagara Region v. D.P., [2002] O.J. No. 4015 (S.C.J.). at para. 12.


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The rule applies in all contexts, even in criminal law where the accuseds liberty is at stake.Criminal law is a very good example of the doctrine because it is the source of many appeals to theSCC, given that lower courts often apply provisions of the Criminal Code inconsistently. Theprinciple is aptly illustrated by the SCC decision in R. v. Sarson.6 In that case, an accused was

convicted of constructive murder under s. 213(d) of the Criminal Code. The accused pleaded guiltyto the lesser included offence of second degree murder, and was sentenced to life imprisonmentwithout the potential for parole for 15 years. Eleven months later, the SCC struck down s. 213(d) asunconstitutional in R. v. Vaillancourt.7 Having pleaded guilty, the accused had not sought anyappeal of his sentence. The SCC held that he could not rely on the Vaillancourtdecision and bereleased, even if he was convicted under a now unconstitutional provision of the Criminal Code.The Court held that an accused may rely on subsequently decided judicial authorities only if theaccused is still in the judicial system. The rationale for this limitation is that finality, even incriminal proceedings where the accuseds liberty is at stake, is of the utmost importance and theneed for finality is adequately served by the normal operation of res judicata: a matter once finally

judicially decided cannot be re-litigated.8

In R. v. Sarson, the Court also opined, relying on its decision in Reference re Manitoba LanguageRights,9 that res judicata would even preclude the reopening of cases decided by the courts on thebasis of constitutionally invalid laws and would apply with at least as much force to cases decidedon the basis of subsequently overruled case law.

As a result, the Court held that, unless the accused is still in the judicial system, i.e. an appeal hasbeen launched, an application for leave has been made, or an application for an extension of timehas been granted, the accused will not be able to reopen his or her case and rely on subsequentlydecided judicial authorities, even where the provision under which the accused was convicted issubsequently declared constitutionally invalid.

In SOCANs submission, the SCCs decision in Sarson would clearly apply to the CWTA ringtonedecision. In addition to that case no longer being in the system, the ringtone providers haveexhausted all of their appeal possibilities and leave to appeal to the SCC was dismissed.Therefore, the ringtone providers reliance on the ESA Decision would be an indirect attack if theybrought an application for a declaration that CWTA was wrongly decided following the ESADecision. The SCC in Sarson held that res judicata applied with greater force in the context of anindirect attack. 10 An application by the ringtone providers would be an indirect or collateral attackand would fail on the ground that the CWTA decision was made pursuant to the judgment of a courtof competent jurisdiction. The fact that the Court may have made an error of law in applying astatute would not deprive the court of jurisdiction. The matters before the Court in the CWTA caseare matters of settled law, and are subject to the doctrine of res judicata. The same must surelyhold true for the decision of the Board that gave rise to the CWTA case.

Tariff 24 for the period 2006-2013 was certified by the Board on June 29, 2012. The Applicants had

thirty days in which to seek judicial review of the decision, including eighteen days following therelease of the ESA and Rogers decisions. In other words, the Boards decision was in the legalsystem until July 30, 2012. However, the Applicants did not proceed to seek judicial review.

6R. v. Sarson, [1996] 2 SCR 223.

7R. v. Vaillancourt, [1987] 2 S.C.R. 636.

8R. v. Sarson, [1996] 2 SCR 223 at para. 26.

9Reference re Manitoba Language Rights, [1985] 1 S.C.R. 721, at p. 757.

10R. v. Sarson, [1996] 2 SCR 223 at para. 35.


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SOCAN submits, therefore, that the Boards June 29, 2012 decision, like its August 18, 2006decision, is protected by the principles ofres judicata and can no longer be attacked, either by wayof judicial review or, indirectly, by way of an application for a declaration of material change basedon a change in law.

As noted above, there are strong policy reasons for this. To hold otherwise would allow any partyvexed by a court decision or a tribunal decision to seek to overturn it, long after the fact, wheneverthere is a change in the law. This could present an enormous logistical challenge, substantiallyincreasing the number of cases being litigated. More importantly, it would mean that no one couldever safely rely upon the finality of a decision. Tariff 24 is a good example: SOCAN, as is its usualpractice, did not distribute any Tariff 24 royalties to its members while there were still legalchallenges pending to the Boards 2006 decision certifying it. However, once the SCC denied leaveto appeal, the CWTA decision became final and SOCAN proceeded to distribute royalties inreliance upon the fact that the certified tariff was valid. The parties, in good faith, have relied uponthe validity of Tariff 24 since 2008: the users have (until very recently) remitted licence fees andSOCAN has made distributions to its members under it. Moreover, the parties then proceeded tonegotiate and, in 2010, agree upon the form of Tariff 24 through to the end of 2013. Again, inreliance upon that agreement, the users have continued to pay licence fees and SOCAN hasdistributed royalties to its members. If the Board were to declare, now, almost ten years after thefact that all licence fees back to 2003 were invalidly collected and paid, it would work an enormoushardship, not to mention administrative burden, to have to recoup those payments from individualSOCAN members and remit them to the ringtone providers.

More importantly, what would the impact be on the collective administration of rights? How could acollective society ever safely distribute royalties to its members, if payment under a tariff that wasupheld by the Board and the courts could, at some point in the future, be overturned because of adecision relating to a different tariff (or even the same tariff for a different time period)? Tariff 22.Ais different: the tariff for the entire 1996-2006 period was before the Board for Phase II in 2007 andwas directly in issue before the FCA and SCC in ESA and Rogers. SOCAN has not distributed

Tariff 22.A royalties to its members because of the on-going challenges to the validity of that tariffand, as a result ofESA, it can now refund royalties collected to the users who paid them under thatTariff ; however it began distributing Tariff 24 royalties once that tariff had finally been determined tobe valid.

If the ESA Decision applies to Ringtones, it should only apply prospectively

For the reasons set out below, SOCAN submits that ESA does not apply to ringtones because ofimportant factual differences between videogames and musical tracks on the one hand andringtones on the other and so, even if the Applicants can now challenge that tariff, the challengeshould be dismissed. In the alternative, if the Board concludes that the facts are sufficiently similarto be safely able to apply ESA to ringtones, then SOCAN submits that the challenge still fails

because the ESA decision only applies prospectively. This argument has two facets:

i) because of the doctrine ofres judicata and the binding validity ofCWTA, the Board was correctwhen it rendered its decision on June 29, 2012 certifying Tariff 24 for 2006-2013. Since there wasno judicial review sought of that decision, Tariff 24 is valid to the end of the 2013 period;


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ii) alternatively, if the Board concludes that ESA has affected its jurisdiction to certify a tariff forringtones, SOCAN submits that the change in the law only works from the date of the release of theSCC decision (i.e July 12, 2012) and any royalties payable prior to that date were validly collected.

If Tariff 24 users had proceeded to file applications for judicial review of the Boards decision ofJune 29, 2012, they likely would have argued that notwithstanding the CWTA decision (and thedismissal of the application for leave to appeal that case), the Board did not have jurisdiction tocertify a tariff for ringtones on June 29, 2012 in light of the subsequent ESA decision. Theirargument would likely have been that the ESA Decision has a retrospective effect and that theBoards most recent Tariff 24 decision is not protected by res judicata. However SOCAN wouldhave argued that the ESA Decision only applies prospectively. Since the Board had jurisdiction tocertify the tariff at the time that it did (i.e. in June 2012), the application for judicial review would beunsuccessful.

Usually, the SCCs practice seeks to avoid departing from its own precedents, unless there arecompelling reasons to do so. Where the SCC overturns its own precedents (in this case overturningits previous decision to dismiss the application for leave to appeal the CWTA decision), theapplication of the new interpretation (i.e., the ESA Decision) generally applies only prospectively todecisions rendered after (i.e. after July 12, 2012).

When the SCC overturns its own precedents, the decision may have retrospective effects but onlyfor those cases that are not subject to the doctrine of res judicata. This principle was subject todiscussion in Canada (Attorney General) v. Hislop, where Lebel and Rothstein JJ. held, for theCourt, that the principle was derived from Blackstones famous aphorism that judges do not createlaw but merely discover it. In this perspective, courts grant retroactive relief applying existing law orrediscovered rules which are deemed to have always existed.

However, Lebel and Rothstein JJ. acknowledged in Hislop that when the law changes throughjudicial intervention, courts operate outside of the Blackstonian paradigm. In those situations, it

may be appropriate for the court to issue a prospective rather than a retroactive remedy. Moreover,Lebel and Rothstein JJ. also opined that when the SCC departs from its own jurisprudence byexpressly overruling or implicitly repudiating a prior decision [...] such clear situations would

justify recourse to prospective remedies in a proper context (emphasis added). In the end, Lebeland Rothstein JJ. stated that:

People generally conduct their affairs based on their understanding of what the lawrequires. [...W]here a judicial ruling changes the existing law or creates new law, itmay, under certain conditions, be inappropriate to hold the government retroactivelyliable. [...] In this way, a balance is struck between the legitimate reliance interests ofactors who make decisions based on a reasonable assessment of the state of thelaw at the relevant time on one hand and the need to allow constitutional

jurisprudence to evolve over time on the other.11

In light of the above, it is SOCANs submission that the CWTA decision is protected by the doctrineofres judicata and the Board should not vary its previous decisions.

11Canada (Attorney General) v. Hislop, [2007] 1 SCR 429 at para. 103.


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If the ESA Decision applies, then it should only apply prospectively, i.e. to decisions rendered afterJuly 12, 2012. It will be open to the Objectors at the next Tariff 24 hearing to argue that the Boardshould apply ESA and Rogers to ringtones and ringbacks. It is open to the Applicants, the nexttime there is a Tariff 24 hearing, to lead evidence as to why ESA should be applied to ringtones.

SOCAN would have the opportunity to ask interrogatories, to file evidence on the issue and tochallenge the evidence filed by the Objectors.

In the alternative, if the Board were to conclude that ESA and Rogers amount to a material changeand that policy reasons should not preclude the Board from varying its decision, then SOCANsubmits that such material change only affects the certified tariff from the date of the materialchange and not retroactively. The Board came to a similar conclusion in Retransmission of DistantRadio and Television Signals (Re) 12 where it allowed CBRAs application to vary the 1992-1994tariff but only from the date of the coming into force of NAFTA, i.e. January 1, 1994. The tariff, aspreviously certified remained in effect up until the date of the material change and was varied onlythereafter. Applied to the within case, SOCAN submits that the change in the law only works fromthe date of the release of the SCC decision (i.e July 12, 2012) and any royalties payable prior tothat date were validly collected and are unaffected by the material change.

Factual differences between ESA and Ringtones

To be successful on a challenge to the ringtones tariff, the Applicants must convince the Board thatESA should be applied to ringtones in the same way as videogames and full tracks of musicalworks, notwithstanding some important factual differences. SOCAN concedes that the Board foundthat ringtones are audio files which are downloaded by the subscriber to his or her cell phonesmemory. However, one of the key bases upon which the Supreme Court concluded that downloadsof videogames were akin to reproductions and not communications was the fact that the copy of thevideogame that the user would download to his/her computer was identical in all respects to thephysical hardcopy of the game that the user could purchase in a store. The same is not true forringtones. There is no identical physical market for ringtones in which one can buy a ringtone CD in

a store. Ringtones downloaded to the users cell phone are identical in all respects to a ringtonethat can be purchased in a store.

Secondly, there is no layering of rights which was another key concern of the Court - becauseCSI does not collect royalties for the download of ringtones in the way that it does for online musicservices.

Finally, there may also be an issue as to whether the use of ringtones and ringbacks engages apublic performance right that is authorized by the ringtone providers. There is an argument to bemade that the activation of a ringtone in public results in the performance in public of the musicalwork each time the cellphone rings and that the ringtone provider has authorized suchperformances within the meaning of s.3(1) of theAct. This would be a free-standing right to collect

license fees in respect of ringtones and ringbacks for which the SCC finding that communicationsmust be akin to performances rather than reproductions would not be an impediment.

None of these elements were considered by the Board when it certified Tariff 24 for the two periodsunder consideration.

12[1996] CBD No 4


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Moreover, there was no evidence whatsoever before the Board in respect of ringbacks and thetechnology by which they are delivered to customers.

SOCAN submits that such evidence as there is (which must be drawn from the evidentiary recordthat was before the Board in 2006 for the hearing of the 2003-2005 tariff which is the only evidencethat the parties have had the opportunity to test) supports SOCANs position that ringtones aredifferent from both videogames and full-length musical tracks and that it is not clear and obviousthat ESA can be automatically applied to ringtones and ringbacks.

The agreement between the Parties

Another important difference between Tariff 24 (2006-2013) and Tariff 22 (1996-2006) is that theformer was certified by the Board in terms agreed upon by SOCAN and the Applicants, whereascertification of Tariff 22 was opposed by many of the major users, including the Applicants. Tthe

Applicants proceeded to negotiate and then to agree to a tariff for the download of ringtones at thevery same time that they were arguing in Tariff 22 (as they previously had in CWTA) that downloadsare not communications. They should be held to their agreement.

In Tariff 22 Phase II, the Cable/Telcos (Bell Canada, Rogers Communications Inc., ShawCablesystems GP, and TELUS Communications Inc.) argued in their statement of case filed March9, 2007, that:

Downloading involves the electronic transmission of a file that contains a musicalwork over the internet so that a copy of the file is stored on the recipients computeror other device. The musical work is not immediately perceivable during the courseof the transmission. When and where (or even if) the musical work contained in thefile is eventually performed are decisions made individually by the recipient.Downloading is, in essence, a delivery function to transfer a reproduction of amusical work from one point to another.13 (emphasis added)

. . .

With respect to the downloading of audio or audiovisual content over the internet,the Cable/Telcos take the position that the point-to-point transmission of individualfiles to consumers does not engage the right to communicate to the public bytelecommunication since there is no communication of the musical work andthe transmission is not to the public. Therefore, with respect to the sale and deliveryto individuals of audio and audiovisual content for download over the internet(whether on a permanent or limited basis), no royalties should be payable toSOCAN.14 (emphasis added)

This position was confirmed in oral argument before the Board.15

13

Statement of case of Bell Canada, Rogers Communications Inc., Shaw Cablesystems GP, and TELUSCommunications Inc. (Cable/Telcos), Exhibit Cable/Telco-1, File: SOCAN Tariff 22 (Background Music) 1996 2006,para 414

Ibid., para 1115

Transcript, May 8, 2007, Page 2477


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This position was repeated by the Cable/Telcos before the Federal Court of Appeal on judicialreview of the Boards Tariff 22 decision. In their notices of application dated November 19, 2007,the Applicants plead that the Board exceeded its jurisdiction and erred in law in holding that thetransmission of a download over the internet communicates the content of the download.16

Despite making these submissions before the Board in 2007 and before the Federal Court ofAppeal on judicial review, the same Cable/Telcos executed the Tariff 24 agreement. The agreementwas dated January 31, 2010 and was subsequently filed with the Board by SOCAN on behalf of allparties. The Tariff 24 agreement formed the basis upon which the Board certified the Tariff. In thatagreement, the Applicants contractually agreed to the royalty rates and terms for licences forringtones and ringbacks for the periods January 1, 2006 to December 31, 2010 and January 1,2001 to December 31, 2013.

It is important to note that the article 5 of the Tariff 24 agreement reserves the following rights to thesignatories:

a. Nothing in this Agreement shall prejudice the rights of any party in respect of

any period subsequent to that covered herein or any music uses other thanthose contemplated herein;

b. Nothing in this Agreement shall constitute an admission by any party as to thevalue of or the royalties payable for the communication rights in musicalworks forming part of Ringtones and Ringbacks in any period subsequent tothe year 2013;

c. The parties shall subsequently be free to take such positions and introducesuch evidence or argument as to the fees payable to SOCAN for any periodsubsequent to this Agreement as any party may deem advisable.

This clause shall survive the termination of this Agreement.

The parties did not, however, reserve the right to apply to the Board to vary the certified tariff in theevent that there was a change in the law. This is in contrast to the agreements that variousObjectors to SOCAN Tariff 22.D (again, many of whom are the same as the Applicants in this case)have recently entered into with SOCAN, wherein the Objectors requested, and SOCAN agreed to, aclause that stipulates:

9 a. Nothing in this Agreement shall prejudice the rights of any party in respect ofthe outcome and effects of the pending decisions of the Supreme Court of Canada("SCC") in Court files 33922 and 33921. In particular, subject to the ultimatepassage and coming into force of Bill C-11 (Copyright ModernizationAct), if the SCC

finds, without limitation, that the point-to-point transmission over the Internet of adiscrete copy of a work to an individual is not a communication of that work to thepublic by telecommunication within the meaning of paragraph 3(1)(f) of the Copyright

Act, the Agreement shall be null and void to the extent that it purports to apply tothose transmissions; accordingly, the Objectors shall no longer have any obligationspursuant to the terms of the Agreement and/or Tariff 22.D.1, including payment and

16Notice of Application, Court File A-519-07 and Notice of Application, Court File A-520-07


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reporting obligations; and SOCAN shall return any amounts paid pursuant to theAgreement and/or Tariff 22.D.1 within 120 days of the SCCs judgment.

SOCAN submits that if the Applicants had wished to make the Tarif 24 agreement subject to theultimate decision on the meaning of communication to the public in Tariff 22, they could have doneso in the same way that they reserved that right to themselves in Tariff 22.D. They knew, at thetime they executed the Tariff 24 agreement, that they were advancing the argument in the Tariff 22

judicial reviews that downloads were not communications within the meaning of s.3(1)(f) of theAct.

Bill C-11

Bill C-11, the Copyright Modernization Act, received royal assent on June 29, 2012 but is not yet inforce. The bill is expected to be proclaimed into force, in whole or in part, later this Fall, once anumber of regulations have been established by cabinet. The MAR amendment in Bill C-11 reads:

Section 2.4 of the Act is amended by adding the following under subsection (1):

(1.1) For the purposes of this Act, communication of a work or other subject-matter tothe public by telecommunication includes making it available to the public bytelecommunication in a way that allows a member of the public to have access to itfrom a place and at a time individually chosen by that member of the public.

The MAR is the legislative means by which a number of European countries and now Canada -have clarified their domestic copyright legislation to ensure the protection of copyright works in thedigital world, including the Internet. It stems from Article 8 of the WIPO Copyright Treaty ("WCT"),which reads as follows:

Without prejudice to the provisions of Articles 11(1)(ii), 11bis(1)(i) and (ii), 11ter(1)(ii),14(1)(ii) and 14bis(1) of the Berne Convention, authors of literary and artistic works

shall enjoy the exclusive right of authorizing any communication to the public of theirworks, by wire or wireless means, including the making available to the public of theirworks in such a way that members of the public may access these works from aplace and at a time individually chosen by them.

What did the drafters of the WIPO treaties intend?

The preparatory documents underlying the introduction of the MAR provide considerable insight intothe intended substance of the right. In a paper discussing the umbrella solution which waspresented to the WIPO committee at the Harvard Symposium (a preparatory session which led tothe copyright treaty), Mihaly Ficsor (former Assistant Director General of WIPO) wrote:

The intention behind this solution is not just to get rid of the problem at theinternational level and pass it over to national laws, without appropriate guaranteesfor efficient protection. Therefore certain elements of such a solution are to bequite precisely identified as a condition of its workability; namely that:

the relevant acts should be described as making available (works or objects ofneighbouring rights) to the public;


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this making available to the public should cover all cases of making available,irrespective of the purpose of the act, namely irrespective of whether it is for thepurpose of perceiving, studying, watching, listening to (with only at most atransient reproduction that may be necessary for such purposes) and/or it isfor the purpose of making copies (permanent or temporary);17 [emphasis added]

Similarly, the notes which accompanied the draft wording which eventually became Article 8provided as follows:

10.09 The provisions of Article 10 [which was renumbered as Article 8] consist of twoparts. The first part extends the exclusive right of communication to the public to allcategories of works, including any communication by wire or wireless means

10.10 The second part of Article 10 explicitly states that communication to the publicincludes the making available to the public of works, by wire or wireless means, in

such a way that members of the public may access these works from a place and ata time individually chose by them. The relevant act is the making available of thework by providing access to it. What counts is the initial act of making the workavailable, not the mere provision of server space, communication connections, orfacilities for the carriage and routing of signals. It is irrelevant whether copies areavailable for the user or whether the work is simply made perceptible to, andthus usable by, the user. 18 [emphasis added]

Other Jurisdictions that have implemented the MAR as a broad communication right

Other than in the US, the MAR has been introduced into domestic legislation as a new right thatcovers a separate protected activity that applies to all forms of internet delivery, be it via download

or stream. In the UK, the MAR provision in s. 20 of the Copyright, Designs and Patents Act 198819has been applied to illegal P2P file-sharing sites that necessarily involve downloading.20 In

Australia, the Copyright Law Review Committee tasked with making recommendations for copyrightreform in Australia expressly rejected the American approach and confirmed the intent to introducea broadly based right of communication which includes a right of making available that would

cover all means of transmission.21

17

M Ficsor, International Harmonization of the Protection and Management of Copyright and Neighboring Rights, in

Naples Forum Book, 137-8, cited in M. Ficsor, The Law of Copyright and the Internet: The 1996 WIPO Treaties, theirInterpretation and Implementation (Oxford: Oxford University Press, 2002) at 208.18

Records of the Diplomatic Conference at 204, cited in Ficsor, supra note 17 at 243.19

Copyright, Designs and Patents Act, 1988 c.4820

Polydor Ltd. & Ors v Brown & Ors , [2005] EWHC 3191 (Ch); Dramatico Entertainment Ltd & Ors v British SkyBroadcasting Ltd &Ors, [2012]EWHC 268 (Ch21

Copyright Law Review Committee, Simplification of the Copyright Act 1968 PART 2: Categorisation of Subject Matterand Exclusive Rights, and Other Issues (February 1999), at para. 4.14


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The Canadian implementation

In Canada, the recent amendments to the Copyright Actwere intended to bring Canada in line withits WIPO Treaty obligations.

Section 3 of the amending legislation adds a new subsection to the definitions in section 2.4 of theAct:

(1.1) For the purposes of this Act, communication of a work or other subject-matter to thepublic by telecommunication includes making it available to the public by telecommunicationin a way that allows a member of the public to have access to it from a place and at a timeindividually chosen by that member of the public.

The Government issued several statements describing the Governments vision for the newActandits objectives for Bill C-11:

What the bill will do

This bill will implement the rights and protections of the World Intellectual PropertyOrganization (WIPO) Internet treaties and give Canadian creators and consumers the toolsthey need to remain competitive internationally. The WIPO Copyright Treaty and the WIPOPerformances and Phonograms Treaty, negotiated in 1996, established new rights andprotections for authors, sound recording makers and performers of audio works.

Through this legislation, the Government will:

modernize the Copyright Act to bring it in line with advances in technology andinternational standards;

advance the interests of Canadians, from those who create content to the consumerswho benefit from it;

provide a framework that is forward-looking and flexible, and that will help protectand create jobs, stimulate the Canadian economy, and attract new investment toCanada; and

establish rules that are technologically neutral, so they are flexible enough to evolvewith changing technologies and the digital economy, while ensuring appropriateprotection for both creators and users.

The following is a summary of what the provisions of the Copyright Modernization Act mean

for Canadians.

Creators, performers, and copyright owners

New rights for Canadian creators


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Canadian creators, performers, and artists will benefit from the full range of rights andprotections in the WIPO Internet treaties, including an exclusive right to control how theircopyrighted material is made available on the Internet.22

Industry Canada goes into further detail on the implementation of the WIPO treaties as follows:

The WIPO Copyright Treaty and the Performances and Phonograms Treaty, collectivelyknown as the WIPO Internet treaties, establish new rights and protections for authors,performers and producers. Canada signed the treaties in 1997. The proposed Bill willimplement the associated rights and protections to pave the way for a future decision onratification. All copyright owners will now have a "making available right", which is anexclusive right to control the release of copyrighted material on the Internet. 23

[emphasis added]

The glossary to the Governments public description of the Bill suggests that services like iTuneswould be covered by the MAR:

Making available right

An exclusive right of copyright owners to authorize the communication of their work or otherrelated subject matter in a manner in which the time and place of receiving thecommunication can be individually chosen by members of the public (e.g., iTunes).24

These statements confirm that the Government conceived of the MAR as a communication rightthat encompasses all forms of Internet distribution, consistent with the intentions of the WIPOdrafters and the legislatures of the UK and Australia cited above.

Section 2.4(1.1) deems all acts of making available to be acts of communication

A review of the literature surrounding the formation of the WPIO treaties and examination of theimplementation of the MAR in other commonwealth countries and in Canada confirms that the MARamendment should be considered a deeming provision that transforms all acts of making availableinto communications. The MAR is a new right (and conceptually distinct from a simplecommunication) that, pursuant to s. 2.4(1.1), is deemed a communication to the public bytelecommunication.

Aside from the initial reproduction that may be involved in uploading a digital file to an Internetserver, all subsequent dealings with that file by the public, if any, would be protected under theMAR, regardless of whether the subsequent dealing was in the form of a download or stream. Theperson operating a server with musical works requires authorization from the copyright holder in

22Government of Canada, Copyright Modernization Act Backgrounder, 23

Government of Canada, What the Copyright Modernization Act Means for Copyright Owners, Artists and Creators,24

Government of Canada, Glossary,


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order to make the files accessible to any member of the public. In this way, it does not matter if thefile is actually downloaded or streamed at all. What matters is that the public has access to the file. 25

It is SOCANs position that with the coming into force of Bill C-11, the introduction of the MAR re-establishes SOCANs right to require licences and the Boards jurisdiction to certify tariffs inrespect of the downloading of musical works made available to the public in such a way thatmembers of the public may access the musical works from a place and at a time individually chosenby them. This would cover ringtones and ringbacks, as well videogames and full-length musicaltracks.

In the circumstances, the Board should decline to act upon the application to vary filed by theApplicants even in the event that the Board were to conclude that the ESA decision amounts to amaterial change. In the alternative, if the Board were to conclude that ESA invalidates the basisupon which SOCAN is entitled to collect licence fees for the download of ringtones, suchinvalidation should run only from July 12, 2012 (the date of the material change) until the cominginto force of the amendment to s. 2.4 of theAct.

Yours very truly,

D. Lynne Watt

DLW:dlm

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25

Note that this situation would be similar to a television broadcast that no one watches. In Canada, this stillconstitutes a communication to the public.

T.24 - SOCAN Response to Appn ToVary, September 10, 2012 Ltr to Gilles McDougall-OTT_LAW-3299187-V5

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Transcript of T.24 - SOCAN Response to Appn ToVary, September 10, 2012 Ltr to Gilles McDougall-OTT_LAW-3299187-V5