Reference Re Broadcasting Act, (2011) 413 N.R. 312 (FCA)

• Judge: Nadon, Sharlow and Layden-Stevenson, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: February 28, 2011
• Jurisdiction: Canada (Federal)
• Citations: (2011), 413 N.R. 312 (FCA);2011 FCA 64

Ref. Re Broadcasting Act (2011), 413 N.R. 312 (FCA)

MLB headnote and full text

Temp. Cite: [2011] N.R. TBEd. MR.027

In The Matter Of the Broadcasting Act, S.C. 1991, c. 11;

And In The Matter Of the Canadian Radio-Television and Telecommunications Commission's Broadcasting Regulatory Policy CRTC 2010-167 and Broadcasting Order CRTC 2010-168;

And In The Matter Of an Application by way of a Reference to the Federal Court of Appeal pursuant to sections 18.3(1) and 28(2) of the Federal Courts Act, R.S.C. 1985, c. F-7.

(A-113-10; 2011 FCA 64)

Indexed As: Reference Re Broadcasting Act

Federal Court of Appeal

Nadon, Sharlow and Layden-Stevenson, JJ.A.

February 28, 2011.

Summary:

Under current CRTC policy, broadcast distribution undertakings (BDUs) (Bell Canada, Rogers, Telus, etc.) picked up over-the-air signals of private local television stations and retransmitted them to their subscribers for a fee. In exchange, the CRTC required the BDUs to provide certain benefits to the local stations: preferential channel placement, simultaneous distribution, percentage of gross revenues to the local programming improvement fund, etc. Due to changes in the broadcasting business environment (satellite television, specialty channels, alternative media platforms), the CRTC proposed a "value for signal" regime, which would give local stations the right to negotiate with BDUs for compensation for the right to retransmit that station's signals and the right to preclude retransmission if a contract was not concluded. The BDUs did not challenge the soundness of the CRTC's policy analysis, its understanding of the relevant facts, its decision that the value for signal regime was required to meet the policy objectives of s. 3(1) of the Broadcasting Act, or the reasonableness of the value for signal regime. However, the BDUs argued that the CRTC lacked statutory authority to implement a value for signal regime because it would conflict with their rights under the Copyright Act by giving local stations the right to block a BDU from retransmitting that station's signal absent a concluded contract for compensation. Section 31(2) of the Copyright Act provided that a BDU retransmitting a local station's signal did not infringe copyright (s. 21) if the retransmission was lawful under the Broadcasting Act, complied with any regulations under s. 31(3)(b) of the Copyright Act, and the signal was simultaneously retransmitted without alteration. Because s. 31(2) contemplated a royalty for the retransmission of distant signals only, a local station with a local signal had no right to demand a royalty from a BDU. The CRTC referred the following question to the court: "Is the Commission empowered, pursuant to its mandate under the Broadcasting Act, to establish a regime to enable private local television stations to choose to negotiate with broadcasting distribution undertakings a fair value in exchange for the distribution of the programming services broadcast by those local television stations?".

The Federal Court of Appeal, per Sharlow, J.A. (Layden-Stevenson, J.A., concurring), answering yes to the question, held that "Parliament has ranked the objectives of Canada's broadcasting policy ahead of those statutory retransmission rights. ... it is open to the Commission to adopt a regulation or a licensing condition that would oblige a BDU to pay money to a private local television station for the right to retransmit its signals, provided the Commission determines that the imposition of such an obligation is required to meet the objectives of Canada's broadcasting policy as stated in subsection 3(1) of the Broadcasting Act". Nadon, J.A., dissenting, held that "the value for signal regime ... is ultra vires the powers of the [CRTC] ... the regime conflicts with Parliament's clear statement in paragraph 31(2)(d) of the Copyright Act that royalties must be paid only for the retransmission of distant signals and not for the retransmission of local signals".

Administrative Law - Topic 9058

Boards and tribunals - Jurisdiction of particular boards and tribunals - Canadian Radio-Television and Telecommunications Commission - [See Telecommunications - Topic 6475 ].

Copyright - Topic 3429

Fees, charges or royalties - Determination of - Retransmission of distant or local radio and television signals - [See Telecommunications - Topic 6475 ].

Telecommunications - Topic 6475

Commissions - Regulation - Powers - Retransmission of distant and local television signals - Under current CRTC policy, broadcast distribution undertakings (BDUs) (Bell Canada, Rogers, Telus, etc.) picked up over-the-air signals of private local television stations and retransmitted them to their subscribers for a fee - In exchange, the CRTC required the BDUs to provide certain benefits to the local stations: preferential channel placement, simultaneous distribution, percentage of gross revenues to the local programming improvement fund, etc. - Due to changes in the broadcasting business environment (satellite television, specialty channels, alternative media platforms), the CRTC proposed a "value for signal" regime, which would give local stations the right to negotiate with BDUs for compensation for the right to retransmit that station's signals and the right to preclude retransmission if a contract was not concluded - The BDUs did not challenge the soundness of the CRTC's policy analysis, its understanding of the relevant facts, its decision that the value for signal regime was required to meet the policy objectives of s. 3(1) of the Broadcasting Act, or the reasonableness of the value for signal regime - However, the BDUs argued that the CRTC lacked statutory authority to implement a value for signal regime because it would conflict with their rights under the Copyright Act by giving local stations the right to block a BDU from retransmitting that station's signal absent a concluded contract for compensation - Section 31(2) of the Copyright Act provided that a BDU retransmitting a local station's signal did not infringe copyright (s. 21) if the retransmission was lawful under the Broadcasting Act, complied with any regulations under s. 31(3)(b) of the Copyright Act, and the signal was simultaneously retransmitted without alteration - Because s. 31(2) contemplated a royalty for the retransmission of distant signals only, a local station with a local signal had no right to demand a royalty from a BDU - The CRTC referred the matter of the CRTC's statutory jurisdiction to the court - The Federal Court of Appeal, per Sharlow, J.A. (Layden-Stevenson, J.A., concurring), held that "Parliament has ranked the objectives of Canada's broadcasting policy ahead of those statutory retransmission rights. ... it is open to the Commission to adopt a regulation or a licensing condition that would oblige a BDU to pay money to a private local television station for the right to retransmit its signals, provided the Commission determines that the imposition of such an obligation is required to meet the objectives of Canada's broadcasting policy as stated in subsection 3(1) of the Broadcasting Act" - The Copyright Act did not preclude the CRTC from implementing a value for signal regime - Nadon, J.A., dissenting, held that "the value for signal regime ... is ultra vires the powers of the [CRTC] ... the regime conflicts with Parliament's clear statement in paragraph 31(2)(d) of the Copyright Act that royalties must be paid only for the retransmission of distant signals and not for the retransmission of local signals".

Cases Noticed:

CCH Canadian Ltd. et al. v. Law Society of Upper Canada, [2004] 1 S.C.R. 339; 317 N.R. 107; 2004 SCC 13, refd to. [para. 37].

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; 2002 SCC 42, refd to. [para. 52].

R. v. Furtney et al., [1991] 3 S.C.R. 89; 129 N.R. 241; 51 O.A.C. 299, refd to. [para. 72].

Lévy (Sam) & Associés Inc. v. Azco Mining Inc. (2001), 280 N.R. 155; 2001 SCC 92, refd to. [para. 72].

Mobil Oil Canada Ltd. v. Minister of National Revenue (2001), 281 N.R. 367; 2001 FCA 333, refd to. [para. 78].

Théberge v. Galerie d'Art du Petit Champlain inc. et al. (2002), 285 N.R. 267; 2002 SCC 34, refd to. [para. 85].

Statutes Noticed:

Broadcasting Act, S.C. 1991, c. 11, sect. 2(1) [paras. 16, 17, 18]; sect. 2(2) [para. 17]; sect. 3(1) [para. 21]; sect. 3(2) [para. 22]; sect. 5(1) [para. 15]; sect. 5(2) [para. 23]; sect. 5(3) [para. 24].

Copyright Act, R.S.C. 1985, c. C-42, sect. 21(1) [para. 33]; sect. 31(2), sect. 31(3) [para. 34].

Counsel:

Valérie Dionne and Crystal Hulley, for the CRTC;

Frederick B. Woyiwada, for the Department of Justice;

Neil Finkelstein, Steven Mason and Daniel Glover, for Bell Aliant;

Benjamin Zarnett, Robert Malcolmson and Peter Ruby, for CTV Globemedia;

Gerald Kerr-Wilson, for Rogers Communications;

Chris G. Paliare, and Andrew Lokan, for CanWest Television;

Kent E. Thomson, and James Doris, for Shaw Commission.

Solicitors of Record:

CRTC, Gatineau, Quebec, for the CRTC;

Myles J. Kirvan, Deputy Attorney General of Canada, Ottawa, Ontario, for the Department of Justice;

McCarthy Tétrault LLP, Toronto, Ontario, for Bell Aliant;

Goodmans LLP, Toronto, Ontario, for CTV Globemedia;

Fasken Martineau Dumoulin LLP, Ottawa, Ontario, for Rogers Communications;

Paliare Roland Rosenberg Rothstein LLP, Toronto, Ontario, for CanWest Television;

Davies Ward Phillips & Vineberg LLP, Toronto, Ontario, for Shaw Commission.

This reference was heard on September 13-14, 2010, at Toronto, Ontario, before Nadon, Sharlow and Layden-Stevenson, JJ.A., of the Federal Court of Appeal.

On February 28, 2011, the judgment of the Court was delivered and the following opinions were filed:

Sharlow, J.A. (Layden-Stevenson, J.A., concurring) - see paragraphs 1 to 48;

Nadon, J.A., dissenting - see paragraphs 49 to 88.