Canadian Private Copying Collective v. Canadian Storage Media Alliance et al., 2004 FCA 424

• Judge: Linden, Noël and Evans, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: December 14, 2004
• Jurisdiction: Canada (Federal)
• Citations: 2004 FCA 424;(2004), 329 N.R. 101 (FCA)

CPCC v. CSMA (2004), 329 N.R. 101 (FCA)

MLB headnote and full text

Temp. Cite: [2005] N.R. TBEd. JA.008

Canadian Private Copying Collective (applicant) v. Canadian Storage Media Alliance (Sony of Canada Ltd.; Verbatim Corporation; Fuji Photo Film Canada Inc.; Compaq Computer Corporation; Intel Corporation; Maxell Canada Corp.; Thomson Multimedia Ltd.; Imation Canada Inc.; Hewlett Packard (Canada) Ltd.; Apple Canada Inc.; Memorex Canada Ltd.; AVS Technologies Inc.; Dell Computer Corporation; Samsung Electronics Canada Inc.) and Canadian Wireless Telecommunications Association, Cognos Inc., Consumer Electronic Marketers of Canada, Costco Wholesale Canada Ltd.; Intertan, Inc. (d.b.a. RadioShack Canada); London Drugs Limited; Retail Council of Canada; The Business Depot Ltd. (d.b.a. Staples Business Depot); Wal-Mart Canada Corporation; Future Shop Ltd., Hydraulic Design, Vencon Technologies Inc., Mr. Jeremy Hellstrom, Mr. Martin Hemmings, Mr. Brian M. Hunt, Mr. V. Kuz, Mr. Richard C. Pitt, Mr. Tom A. Trottier (respondents) and Canadian Broadcasting Corporation (intervener)

(A-9-04)

Apple Canada Inc., Dell Computer Corporation of Canada, Hewlett Packard (Canada) Co. and Intel Corporation (applicants) v. Canadian Private Copying Collective (CPCC), Canadian Wireless Telecommunications Association (CWTA), Cognos Inc., Consumer Electronic Marketers of Canada (CEMC), "Retailers Coalition" (being Costco Wholesale Canada Ltd.; Intertan, Inc. (d.b.a. RadioShack Canada); London Drugs Limited; Retail Council of Canada; The Business Depot Ltd. (d.b.a. Staples Business Depot); Wal-Mart Canada Corp.; Future Shop Ltd.), Hydraulic Design, Vencon Technologies Inc., Mr. Jeremy Hellstrom, Mr. Martin Hemmings, Mr. Brian M. Hunt, Mr. V. Kuz, Mr. Richard C. Pitt, and Mr. Tom A. Trottier (respon­dents) and The Copyright Board (intervener)

(A-10-04)

Retail Council of Canada, Wal-Mart Canada, The Business Depot Ltd. (Staples Business Depot), London Drugs Limited, Intertan Inc. (RadioShack Canada), Future Shop Ltd. and Costco Wholesale Canada Ltd. (the "retailers") (applicants) v. Canadian Private Copying Collective ("CPCC") and Canadian Storage Media Alliance, Canadian Wireless Telecommunications Association, Cognos Inc., Consumer Electronic Marketers of Canada, Hydraulic Design, Vencon Technologies Inc., Jeremy Hellstrom, Martin Hemmings, Brian M. Hunt, V. Kuz, Richard C. Pitt and Tom A. Trottier (respondents)

(A-11-04; 2004 FCA 424)

Indexed As: Canadian Private Copying Collective v. Canadian Storage Media Alliance et al.

Federal Court of Appeal

Linden, Noël and Evans, JJ.A.

December 14, 2004.

Summary:

Part VIII of the Copyright Act legalized copying recorded music for private use and thus provided a statutory exception to the exclusive reproduction rights of eligible authors, performers and makers of recorded music (rightsholders). At the same time, Part VIII entitled rightsholders to compensation for their loss of exclusivity by imposing a levy on media used to record music. The Cana­dian Private Copying Collective (CPCC) was the "collecting body" designated by the Copyright Board under the Act to collect and distribute the levies to rightsholders, as set by the board. In setting the 2003-2004 tariff, the board, inter alia, held that the memories embedded in digital audio recorders (i.e., MP3 players and similar devices) were sub­ject to copying levies. Additionally to estab­lishing the levies, the board also held that the so-called "zero-rating program" operated by the CPCC had no legal basis. The zero-rating program provided that cer­tain groups of purchasers (e.g., the Canadian Broadcast­ing Corp. (CBC)) were not required to pay the levy authorized by the board. The board also upheld the constitu­tional validity of Part VIII as a federal copyright law that imposed a regulatory charge and did not, therefore, constitute a tax. Three judicial review appli­cations were filed respecting the board's de­cision: (1) in the first application, the CPCC and the intervenor, the CBC, alleged that the zero-rating program was not illegal; (2) in the second application a coali­tion of blank media retailers (the retailers) chal­lenged the board's ruling on the constitu­tional validity of Part VIII; and (3) in the third application the major manufacturers and importers of blank media as represented by the Canadian Stor­age Media Alliance (CSMA) challenged the board's ruling that the memory embed­ded in MP3 players was leviable under Part VIII and its imposition of a levy thereon in an amount greater than that proposed by the CPCC when it filed its proposed tariff with the board.

The Federal Court of Appeal dismissed the CPCC's application (the first application) respecting the zero-rating program. The court held that although the Copyright Board had no statutory authority to pronounce on the legality of the CPCC's program vis-à-vis third parties, the board was entitled to rule that the program had no statutory under­pin­ning and its impact ought not to be recog­nized in setting the levies. The court also dismissed the media retailers' applica­tion (i.e., the second application), holding that the levy imposed under Part VIII of the Copy­right Act was in pith and substance copy­right law within federal jurisdiction and that the levy did not constitute a tax. The court allowed the CSMA'S (the third appli­cation) in part. The court held that the board had no authority for certifying a levy on digital audio recorders such as MP3 players. How­ever, had the board had such authority, it was open to the board to impose a levy which exceeded that applied for by the CPCC.

Constitutional Law - Topic 5763

Federal jurisdiction (s. 91) - Taxation - What constitutes a tax - Part VIII of the Copyright Act legalized copying recorded music for private use and thus provided a statutory exception to the exclusive repro­duction rights of eligible authors, per­formers and makers of recorded music (right­sholders) - At the same time, Part VIII entitled rightsholders to compensation for their loss of exclusivity by imposing a levy on media used to record music - A co­alition of blank media retailers chal­lenged the constitutional validity of Part VIII, arguing that it was not, in pith and sub­stance, copyright law - Alternatively, the retailers argued that the levy scheme con­stituted a tax - The Federal Court of Appeal held that Part VIII was in pith and substance copyright law within federal jur­is­diction - The court rejected the argu­ment that the levy constituted a tax - Rather, the court stated that the levy pos­sessed all the characteristics of a regulatory charge and was necessarily incidental to a detailed regulatory scheme which fell squarely with­in a federal head of jurisdic­tion - See para­graphs 30 to 73.

Constitutional Law - Topic 6301

Federal jurisdiction (s. 91) - Copyright - General - Part VIII of the Copyright Act legalized copying recorded music for pri­vate use and thus provided a statutory ex­ception to the exclusive reproduction rights of eligible authors, performers and makers of recorded music (rightsholders) - At the same time, Part VIII entitled rights­holders to compensation for their loss of exclusiv­ity by imposing a levy on media used to re­cord music - A coalition of blank media retailers challenged the constitu­tional valid­ity of Part VIII, arguing that it was not, in pith and substance, copyright law - The Fed­eral Court of Appeal held that Part VIII was in pith and substance copyright law within federal jurisdiction - See para­graphs 32 to 38.

Copyright - Topic 3435

Fees, charges or royalties - Determination of - Levies on media used to record music - [See Constitutional Law - Topic 5763 ].

Copyright - Topic 3435

Fees, charges or royalties - Determination of - Levies on media used to record music - Part VIII of the Copyright Act legalized copying recorded music for private use and thus provided a statutory exception to the exclusive reproduction rights of eligible authors, performers and makers of re­cord­ed music (rightsholders) - At the same time, Part VIII entitled rightsholders to compensation for their loss of exclusivity by imposing a levy on media used to re­cord music - The Canadian Pri­vate Copy­ing Collective (CPCC) was the "col­lecting body" designated by the Copy­right Board to collect and distribute the levies to right­sholders - In addition to establishing the levies for 2003-2004, the board determined that the so-called "zero-rating program" operated by the CPCC, which exempted cer­tain groups of pur­chasers from paying levies, had no legal basis and would not be taken into account when setting levies - The CPCC applied for judicial review - The Federal Court of Appeal dismissed the ap­plication, holding that although the board had no statutory auth­ority to pro­nounce on the legality of the CPCC's pro­gram vis-à-vis third parties, the board was entitled to rule that the program had no stat­utory underpinning and its impact ought not to be recognized in set­ting the levies - See paragraphs 107 to 127.

Copyright - Topic 3435

Fees, charges or royalties - Determination of - Levies on media used to record music - In setting the 2003-2004 tariff under Part VIII of the Copyright Act for media used to record music, the Copyright Board held that the memories embedded in digital au­dio recorders (i.e., MP3 players and similar devices) were subject to copying levies - The major manufacturers and importers of blank media as represented by the Cana­dian Storage Media Alliance (CSMA) ap­plied for judicial review, chal­lenging the board's ruling that the memory embedded in MP3 players was leviable under Part VIII - The Federal Court of Appeal al­lowed the application holding that it was not open to the Board to estab­lish a levy on memory embedded in digital audio re­corders where Part VIII of the Act and the definition of "audio recording medium" in s. 79 gave the board no such authority - The court held, however, that if the board could have imposed levies on digital audio recorders, it was open to the board to im­pose a levy which exceeded that applied for by the Canadian Private Copying Col­lective (i.e., the designated collecting body) - See paragraphs 133 to 165.

Copyright - Topic 5664

Copyright Board - Jurisdiction - Respect­ing tariffs - [See third Copyright - Topic 3435 ].

Cases Noticed:

Westbank First Nation v. British Columbia Hydro and Power Authority, [1999] 3 S.C.R. 134; 246 N.R. 201; 129 B.C.A.C. 1; 210 W.A.C. 1, refd to. [para. 23].

City National Leasing Ltd. v. General Motors of Canada Ltd., [1989] 1 S.C.R. 641; 93 N.R. 326; 32 O.A.C. 332, refd to. [para. 34].

Global Securities Corp. v. British Colum­bia Securities Commission et al., [2000] 1 S.C.R. 494; 252 N.R. 290; 134 B.C.A.C. 207; 219 W.A.C. 207, refd to. [para. 34].

Lawson v. Interior Tree Fruit and Veg­etable Committee of Direction, [1931] S.C.R. 357, refd to. [para. 39].

Eurig Estate v. Ontario Court (General Division), [1998] 2 S.C.R. 565; 231 N.R. 55; 114 O.A.C. 55, refd to. [para. 40].

Australian Tape Manufacturers Association Ltd. v. Commonwealth of Australia (1993), 176 C.L.R. 480 (Aust. H.C.), refd to. [para. 47].

Théberge v. Galerie d'Art du Petit Champlain inc. et al., [2002] 2 S.C.R. 336; 285 N.R. 267, refd to. [para. 51].

CTV Television Network Ltd. v. Copyright Board (Can.) et al. (1998), 149 N.R. 363; 46 C.P.R.(3d) 343 (F.C.), refd to. [para. 89].

Bishop v. Télé-Métropole Inc., [1990] 2 S.C.R. 467; 111 N.R. 376, refd to. [para. 97].

Bishop v. Stevens - see Bishop v. Télé-Métropole Inc.

Rizzo & Rizzo Shoes Ltd. (Bankrupt), Re, [1998] 1 S.C.R. 27; 221 N.R. 241; 106 O.A.C. 1, refd to. [para. 100].

Bell ExpressVu Limited Partnership v. Rex et al., [2002] 2 S.C.R. 559; 287 N.R. 248; 166 B.C.A.C. 1; 271 W.A.C. 1; 212 D.L.R.(4th) 1, refd to. [para. 100].

Royal Bank of Canada v. Sparrow Electric Corp., [1997] 1 S.C.R. 411; 208 N.R. 161; 193 A.R. 321; 135 W.A.C. 321, refd to. [para. 100].

R. v. Hydro-Quebec, [1997] 3 S.C.R. 213; 217 N.R. 241, refd to. [para. 100].

Friesen v. Minister of National Revenue, [1995] 3 S.C.R. 103; 186 N.R. 243; 95 D.T.C. 5551, refd to. [para. 100].

Trans Mountain Pipe Line Co. v. National Energy Board et al., [1979] 2 F.C. 118; 29 N.R. 44 (F.C.), refd to. [para. 109].

Society of Composers, Authors and Music Publishers of Canada v. Canadian Asso­ciation of Internet Providers, [2002] 4 F.C. 3; 290 N.R. 131; 19 C.P.R.(4th) 289 (F.C.A.), refd to. [para. 110].

Director of Investigation and Research, Competition Act v. Southam Inc. et al., [1997] 1 S.C.R. 748; 209 N.R. 20; 144 D.L.R.(4th) 1, refd to. [para. 112].

Posen et al. v. Minister of Consumer and Corporate Affairs (1979), 36 N.R. 572; 46 C.P.R.(2d) 63 (F.C.), refd to. [para. 116].

FWS Joint Sports Claimant v. Copyright Board (Can.) et al. (1991), 129 N.R. 289; 36 C.P.R.(3d) 483 (F.C.A.), refd to. [para. 117].

Toronto (City) et al. v. Canadian Union of Public Employees, Local 79 et al., [2003] 3 S.C.R. 77; 311 N.R. 201; 179 O.A.C. 291, refd to. [para. 171].

Johnston v. Buckland, [1937] S.C.R. 86, refd to. [para. 174].

Corporation Agencies Ltd. v. Home Bank of Canada, [1925] S.C.R. 706, refd to. [para. 174].

Thibaudeau v. Minister of National Rev­enue, [1995] 2 S.C.R. 627; 182 N.R. 1, refd to. [para. 174].

Statutes Noticed:

Constitution Act, 1867, sect. 91(23) [para. 32].

Copyright Act, R.S.C. 1985, c. C-42, sect. 79 [para. 135]; sect. 83(8), sect. 83(9) [para. 176]; Part VIII [para. 1 et seq.].

Counsel:

David Collier, for the Canadian Private Copying Collective;

J. Aidan O'Neill, for the Canadian Broad­casting Corporation;

Howard P. Knopf and John Macera, for the Retail Council of Canada;

Randall J. Hofley and Nicholas McHaffie, for the Canadian Storage Media Alliance;

Mario Bouchard, for the Copyright Board of Canada.

Solicitors of Record:

Ogilvy Renault, Montreal, Quebec, for the Canadian Private Copying Collective;

Johnston & Buchan, Ottawa, Ontario, for the Canadian Broadcasting Corporation;

Macera & Jarzyna, Ottawa, Ontario, for the Retail Council of Canada;

Stikeman Elliott, Ottawa, Ontario, for the Canadian Storage Media Alliance;

Copy­right Board of Canada, Ottawa, On­tar­io, for the Copyright Board of Canada.

This application was heard in Ottawa, On­tario, on October 12 and 13, 2004, before Linden, Noël and Evans, JJ.A., of the Feder­al Court of Appeal. The following judg­ment was delivered for the court by Noël, J.A., on December 14, 2004, in Ottawa, Ontario.