Society of Composers, Authors and Music Publishers of Canada v. Canadian Association of Internet Providers et al., (2002) 290 N.R. 131 (FCA)

• Judge: Linden, Evans and Sharlow, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: May 01, 2002
• Jurisdiction: Canada (Federal)
• Citations: (2002), 290 N.R. 131 (FCA);2002 FCA 166

SOCAN v. CAIP (2002), 290 N.R. 131 (FCA)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2002] N.R. TBEd. MY.067

Society of Composers, Authors and Music Publishers of Canada (applicant) v. Canadian Association of Internet Providers, Canadian Cable Television Association, AT&T Canada Long Distance Services Company, MCI Communications Corporation, Bell/ExpressVu, Canadian Association of Broadcasters, Telus Communications Inc., Bell Canada, Canadian Broadcasting Corporation, Canadian Motion Picture Distributors Association, Canadian Recording Industry Association, Time Warner Inc., Aliant Inc., MTS Communications Inc. and Saskatchewan Telecommunications (respondents) and The Canadian Recording Industry Association and Neighbouring Rights Collective of Canada (interveners)

(A-764-99; 2002 FCA 166)

Indexed As: Society of Composers, Authors and Music Publishers of Canada v. Canadian Association of Internet Providers et al.

Federal Court of Appeal

Linden, Evans and Sharlow, JJ.A.

May 1, 2002.

Summary:

The Copyright Board was called upon to decide who could be made liable to pay royalties to the owners of the copyright in music transmitted on the Internet. The matter was to be dealt with in two phases. Following Phase 1, the Board ruled that a royalty could be imposed on those who posted music on a server located in Canada to which Internet users have access. However a royalty could not be imposed on those whose only role in Internet transmissions was to operate a server on which music was stored, or to provide a recipient with Internet access. The normal activities of Internet intermediaries, the Board found, did not constitute a communication for the purpose of the Copyright Act, and thus did not infringe the exclusive communication rights of copyright owners. The Board relied, inter alia, on s. 2.4(1)(b) of the Copyright Act which excluded certain activities from the definition of "communication" in the Act. The Society of Composers, Authors and Music Publishers of Canada (SOCAN) applied for judicial review.

The Federal Court of Appeal, Sharlow, J.A., dissenting in part, dismissed the application, except with respect to those parts of the Board's decision which held that transmission from a cache was protected by s. 2.4(1)(b) of the Copyright Act and that a communication by telecommunication occurred in Canada if, but only if, the communication originated from a host server in Canada. The court set aside those two parts of the Board's decision and directed the Board to act in accordance with the court's reasons when setting royalties in Phase II. The court otherwise refused to disturb the Board's ruling.

Copyright - Topic 3444

Fees, charges or royalties - Internet (world wide web) - Music - The Copyright Board ruled that a royalty could be imposed on those who posted music on a server located in Canada to which Internet users have access - However a royalty could not be imposed on those whose only role in Internet transmissions was to operate a server on which music was stored, or to provide a recipient with Internet access - The normal activities of Internet intermediaries, the Board found, did not constitute a communication for the purpose of the Copyright Act, and thus did not infringe the exclusive communication rights of copyright owners - The Board relied on, inter alia, s. 2.4(1)(b) of the Copyright Act which excluded certain activities from the definition of "communication" in the Act - The Society of Composers, Authors and Music Publishers of Canada (SOCAN) applied for judicial review - The Federal Court of Appeal dismissed the application, except with respect to those parts of the Board's decision which held that transmission from a cache was protected by s. 2.4(1)(b) and that a communication by telecommuni-cation occurred in Canada if, but only if, the communication originated from a host server in Canada - See paragraphs 1 to 194.

Copyright - Topic 4487

Infringement of copyright - Acts constituting an infringement - Music - Section 3(1)(f) of the Copyright Act gave the copyright holder in musical works the sole right to communicate the work to the public by telecommunication - Section 2.4(1)(b) provided that a person did not communicate to the public by telecommunication if the only act performed in respect of the communication was the provision of the means of telecommunication necessary for one person to so communicate the work in question to another - The Federal Court of Appeal interpreted these provisions as they applied to Internet intermediaries - The court substantially affirmed a decision of the Copyright Board that excluded most Internet intermediaries from liability to pay royalties to the owners of the copyright in music transmitted on the Internet - See paragraphs 108 to 194.

Copyright - Topic 4490

Infringement of copyright - Acts constituting an infringement - Authorization to exercise rights reserved solely for author - [See seventh Copyright - Topic 4565 ].

Copyright - Topic 4565

Infringement of copyright - Internet intermediaries (incl. host server operators and internet service providers) - [See Copyright - Topic 3444 and Copyright - Topic 4487 ].

Copyright - Topic 4565

Infringement of copyright - Internet intermediaries (incl. host server operators and internet service providers) - Section 3(1)(f) of the Copyright Act gave the copyright holder in musical works the sole right to communicate the work to the public by telecommunication - Section 2.4(1)(b) provided that a person did not communicate to the public by telecommunication if the only act performed in respect of the communication was the provision of the means of telecommunication necessary for one person to so communicate the work in question to another - The Copyright Board held that the normal activities of host server operators and Internet access providers fell within s. 2.4(1)(b) - The Federal Court of Appeal held that it was not unreasonable for the Board to reach this conclusion, except that the Board erred in its conclusion that operating a cache fell within s. 2.4(1)(b) - See paragraphs 143 to 148.

Copyright - Topic 4565

Infringement of copyright - Internet intermediaries (incl. host server operators and internet service providers) - Section 3(1)(f) of the Copyright Act gave the copyright holder in musical works the sole right to communicate the work to the public by telecommunication - Section 2.4(1)(b) provided that a person did not communicate to the public by telecommunication if the only act performed in respect of the communication was the provision of the means of telecommunication necessary for one person to so communicate the work in question to another - The Copyright Board held that the core activities of operators of host servers and Internet access providers did not constitute the communication by telecommunication of material transmitted to end users within s. 3(1)(f) - The Society of Composers, Authors and Music Publishers of Canada (SOCAN) argued that the Board erred in law in this conclusion and that the Internet intermediaries could not rely on s. 2.4(1)(b) as a defence, because the phrase, "the means of telecommunication", could not include the kind of services and active equipment that they provided - The Federal Court of Appeal refused to disturb the Board's determination on this issue where its decision fell at the statute-application end of the spectrum and was, therefore, reviewable only for unreasonableness - See paragraphs 112 to 125.

Copyright - Topic 4565

Infringement of copyright - Internet intermediaries (incl. host server operators and internet service providers) - Section 3(1)(f) of the Copyright Act gave the copyright holder in musical works the sole right to communicate the work to the public by telecommunication - Section 2.4(1)(b) provided that a person did not communicate to the public by telecommunication if the only act performed in respect of the communication was the provision of the means of telecommunication necessary for one person to so communicate the work in question to another - The Copyright Board held that an Internet intermediary was not precluded from relying on s. 2.4(1)(b) simply because it provided services that were ancillary to providing the means of telecommunication or because it performed certain steps or procedures (such as caching) to improve performance (i.e., the Board held that the word "necessary" in s. 2.4(1)(b) extended to an activity that merely improved the quality of Internet communication) - The Federal Court of Appeal held that the Board did not err in law on this issue, except for its holding that an Internet intermediary who "cached" material was thereby providing the means "necessary" for another to communicate it - See paragraphs 126 to 139.

Copyright - Topic 4565

Infringement of copyright - Internet intermediaries (incl. host server operators and internet service providers) - Section 3(1)(f) of the Copyright Act gave the copyright holder in musical works the sole right to communicate the work to the public by telecommunication - Section 2.4(1)(b) provided that a person did not communicate to the public by telecommunication if the only act performed in respect of the communication was the provision of the means of telecommunication necessary for one person to so communicate the work in question to another - The Federal Court of Appeal stated that "whether something is 'necessary' for the purpose of s. 2.4(1)(b) should be determined when the transmission of material from the server occurs, and not when the content provider chooses the means through which to communicate. When the content provider has posted music on a host server, the operator of the host server is then providing the means necessary to enable the content provider to communicate by telecommunication with end users, because, without the disk space provided by the operator of the host server, the end user's request could not be answered. It is irrelevant that the content provider might have chosen other, possibly less convenient, means of communicating the music, such as radio or television, or might have made it available on the hard drive of his or her own Internet-accessible computer." - See paragraph 133.

Copyright - Topic 4565

Infringement of copyright - Internet intermediaries (incl. host server operators and internet service providers) - Section 3(1)(f) of the Copyright Act gave the copyright holder in literary, dramatic, musical or artistic work the sole right to communicate the work to the public by telecommunication - Section 2.4(1)(b) provided that a person did not communicate to the public by telecommunication if the only act performed in respect of the communication was the provision of the means of telecommunication necessary for one person to so communicate the work in question to another - The Copyright Board held that an Internet intermediary's activities were still only the means of telecommunication when they were ancillary to its provision of the necessary means of telecommunication by others, provided that those additional activities did not themselves amount to communication -Thus, operators of host servers did not lose the protection of s. 2.4(1)(b) by providing their normal facilities and services, such as, housing and maintaining the servers, and monitoring "hits" on particular Web pages, because these were merely ancillary to the provision of disk space and did not involve any act of communication, regardless of the limits on the definition of communication contained in that paragraph - The Federal Court of Appeal agreed with this determination - See paragraphs 140 to 142.

Copyright - Topic 4565

Infringement of copyright - Internet intermediaries (incl. host server operators and internet service providers) - Section 3(1)(f) of the Copyright Act gave the copyright holder in musical works the sole right to communicate the work to the public by telecommunication - Section 2.4(1)(b) provided that a person did not communicate to the public by telecommunication if the only act performed in respect of the communication was the provision of the means of telecommunication necessary for one person to so communicate the work in question to another - The Copyright Board held that the normal activities of host server operators and Internet access providers fell within s. 2.4(1)(b) - The Society of Composers, Authors and Music Publishers of Canada (SOCAN) argued that the Board erred in failing to conclude that, in providing their core services and equipment, Internet intermediaries "authorized" the communication of material requested by end users from host servers thereby infringing copyright contrary to s. 3(1) of the Act - The Federal Court of Appeal held that the Board's decision was not unreasonable - See paragraphs 149 to 162.

Copyright - Topic 4565

Infringement of copyright - Internet intermediaries (incl. host server operators and internet service providers) - The Copyright Board rendered a decision excluding most Internet intermediaries from liability to pay royalties for copyright music transmitted on the Internet - The Board held that a communication by telecommunication occurs in Canada if, but only if, the communication originated from a host server in Canada - The Federal Court of Appeal held that the Board erred in law in this part of its decision - The court held that copyright material was not communicated until it was received on the end user's computer, and the location of the host server could not alone determine where the communication occurred - Rather the court held that a "real and substantial connection with Canada" test should be applied in determining where the communication occurred, in locating the infringing activity of authorizing a communication when a content provider posts copyright material on a host server and regarding communication from caches and hyperlinks - See paragraphs 163 to 192.

Copyright - Topic 5667

Copyright Board - Jurisdiction - Judicial review - The Copyright Board was called upon to decide who could be made liable to pay royalties to the owners of the copyright in music transmitted on the internet - The matter was to be dealt with in two phases - Following Phase 1, the Board rendered a decision excluding most Internet intermediaries from liability to pay royalties for copyright music transmitted on the Internet - The Society of Composers, Authors and Music Publishers of Canada (SOCAN) applied for judicial review - The Federal Court of Appeal agreed with the parties that the court had jurisdiction to review the Board's decision - With respect to the standard of review, the court held that the Board's interpretation of the provisions of the Copyright Act relevant in this case was reviewable on a standard of correctness, while deference was due to the Board's application of those provisions to the facts - See paragraphs 33 to 107.

Statutes - Topic 1806

Interpretation - Intrinsic aids - Bilingual statutes - Interpretation of one version by reference to the other - In interpreting the meaning of the word "necessary" in the English version of s. 2.4(1)(b) of the Copyright Act, the Federal Court of Appeal looked to the French version of s. 2.4(1)(b) - See paragraphs 129 to 132.

Words and Phrases

Means of telecommunication - The Federal Court of Appeal discussed the meaning of this phrase as it was used in s. 2.4(1)(b) of the Copyright Act, R.S.C. 1985, c. C-42 - See paragraphs 112 to 125.

Words and Phrases

Necessary - The Federal Court of Appeal discussed the meaning of this word as it was used in s. 2.4(1)(b) of the Copyright Act, R.S.C. 1985, c. C-42 - See paragraphs 126 to 142.

Cases Noticed:

AVS Technologies Inc. et al. v. Canadian Mechanical Reproduction Rights Agency et al. (2000), 257 N.R. 283; 7 C.P.R.(4th) 68 (F.C.A.), not folld. [para. 40].

Pushpanathan v. Canada (Minister of Citizenship and Immigration), [1998] 1 S.C.R. 982, addendum [1998] 1 S.C.R. 1222; 226 N.R. 201, refd to. [para. 47].

Offshore Logistics Inc. v. International Longshoremen's Association, Local 269 (2000), 257 N.R. 338 (F.C.A.), refd to. [para. 47].

VIA Rail Canada Inc. v. Cairns et al., [2001] 4 F.C. 139; 270 N.R. 237 (F.C.A.), refd to. [para. 47].

Chieu v. Canada (Minister of Citizenship and Immigration) (2002), 280 N.R. 268 (S.C.C.), refd to. [para. 47].

Canadian Association of Broadcasters v. Society of Composers, Authors and Music Publishers of Canada (1994), 175 N.R. 341; 58 C.P.R.(3d) 190 (F.C.A.), refd to. [para. 51].

Réseaux Premier Choix Inc. v. Canadian Cable Television Association et al. (1997), 223 N.R. 43; 80 C.P.R.(3d) 203 (F.C.A.), refd to. [para. 51].

Society of Composers, Authors and Music Publishers of Canada v. Canadian Association of Broadcasters et al. (1999), 239 N.R. 119; 1 C.P.R.(4th) 80 (F.C.A.), refd to. [para. 51].

Syndicat canadien de la fonction publique, section locale 301 v. Montréal (Ville), [1997] 1 S.C.R. 793; 210 N.R. 101, refd to. [para. 60].

Canadian Union of Public Employees, Local 301 v. Montreal (City) - see Syndicat canadien de la fonction publique, section locale 301 v. Montréal (Ville).

Domtar Inc. v. Commission d'appel en matière de lésions professionnelles et autres, [1993] 2 S.C.R. 756; 154 N.R. 104; 55 Q.A.C. 241, refd to. [para. 68].

Director of Investigation and Research, Competition Act v. Southam Inc. et al., [1997] 1 S.C.R. 748; 209 N.R. 20, refd to. [para. 77].

Stelco Inc. v. British Steel Canada Inc. et al., [2000] 3 F.C. 282; 252 N.R. 364 (F.C.A.), refd to. [para. 77].

Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817; 243 N.R. 22, refd to. [para. 77].

Minister of National Revenue (Customs and Excise) v. Mattel Canada Inc., [2001] 2 S.C.R. 100; 270 N.R. 153, refd to. [para. 78].

Ivanhoe Inc. et al. v. United Food and Commercial Workers, Local 500 et al. (2001), 272 N.R. 201; 201 D.L.R.(4th) 557 (S.C.C.), refd to. [para. 79].

Westcoast Energy Inc. v. National Energy Board et al., [1998] 1 S.C.R. 322; 223 N.R. 241, refd to. [para. 80].

Housen v. Nikolaisen et al. (2002), 286 N.R. 1 (S.C.C.), refd to. [para. 80].

Danyluk v. Ainsworth Technologies Inc. et al., [2001] 2 S.C.R. 460; 272 N.R. 1; 149 O.A.C. 1, refd to. [para. 90].

Federation Insurance Co. of Canada v. Vineski et al. (1997), 108 O.A.C. 200 (Div. Ct.), refd to. [para. 101].

Kirkham v. State Farm Mutual Automobile Insurance Co., [1998] O.J. No. 6459 (Div. Ct.), leave to appeal refused [1998] O.J. No. 2872 (C.A.), refd to. [para. 102].

H'ng et al. v. Allstate Insurance Co. of Canada et al., [2000] O.J. No. 3589 (Sup. Ct.), refd to. [para. 103].

Luu v. Zurich Insurance Co. (1997), 98 O.A.C. 344; 32 O.R.(3d) 807 (Div. Ct.), revd. (1999), 43 O.R.(3d) 484 (C.A.), refd to. [para. 103].

Bishop v. Télé-Métropole Inc., [1990] 2 S.C.R. 467; 111 N.R. 376, refd to. [para. 118].

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

Théberge v. Galerie d'Art du Petit Champlain inc. et al. (2002), 285 N.R. 267 (S.C.C.), refd to. [para. 119].

Blue Crest Music Inc. et al. v. Compo Co., [1980] 1 S.C.R. 357; 29 N.R. 296, refd to. [para. 150].

Vigneux v. Canadian Performing Rights Society Ltd., [1945] A.C. 108 (P.C.), refd to. [para. 157].

Muzak Corp. v. Composers, Authors and Publishers Association of Canada Ltd., [1953] 2 S.C.R. 182, refd to. [para. 157].

Apple Computer Inc. et al. v. Mackintosh Computers Ltd., [1987] 1 F.C. 173; 3 F.T.R. 118 (T.D.), refd to. [para. 158].

Apple Computer Inc. et al. v. Mackintosh Computers Ltd., [1990] 2 S.C.R. 209; 110 N.R. 66, refd to. [para. 158].

C.B.S. Inc. v. Ames Records & Tapes Ltd., [1982] Ch. 91 (Ch.D.), refd to. [para. 160].

R. v. Goldman, [1980] 1 S.C.R. 976; 30 N.R. 453, refd to. [para. 175].

Moran v. Pyle National (Canada) Ltd., [1975] 1 S.C.R. 393; 1 N.R. 122, refd to. [para. 187].

Morguard Investments Ltd. et al. v. De Savoye, [1990] 3 S.C.R. 1077; 122 N.R. 81, refd to. [para. 187].

Braintech Inc. v. Kostiuk (1999), 120 B.C.A.C. 1; 196 W.A.C. 1; 171 D.L.R.(4th) 46 (C.A.), refd to. [para. 188].

Gutnick v. Dow Jones & Co., [2001] V.S.C. 305 (Sup. Ct. Vic.), refd to. [para. 188].

WIC Premium Television Ltd. v. General Instrument Corp. et al. (2000), 266 A.R. 142; 228 W.A.C. 142; 8 C.P.R.(4th) 1 (C.A.), refd to. [para. 189].

R. v. Libman, [1985] 2 S.C.R. 178; 62 N.R. 161; 12 O.A.C. 33, refd to. [para. 190].

Canadian Human Rights Commission v. Canadian Liberty Net et al., [1998] 1 S.C.R. 626; 224 N.R. 241, refd to. [para. 190].

Statutes Noticed:

Copyright Act, R.S.C. 1985, c. C-42, sect. 2, sect. 2.4(1)(b), sect. 3(1)(f) [para. 31].

Authors and Works Noticed:

Industry Canada, Intellectual Property Policy Directorate, and Canadian Heritage, Copyright Policy Branch, Consultation Paper on Digital Copyright Issues (June 22, 2001), pp. 21 to 28 [para. 162].

Counsel:

Y.A. Georges Hynna, Paul Spurgeon and Ashley Dent, for the applicant;

Mark S. Hayes, for the respondents;

Glen A. Bloom, for the intervener, Canadian Recording Industry Association (CRIA);

David Collier and Dominic Gourgues, for the intervener, Neighbouring Rights Collective of Canada (NRCC).

Solicitors of Record:

Gowling, Strathy & Henderson, Ottawa, Ontario, for the applicant;

Davies Ward Phillips & Vineberg LLP, Toronto, Ontario, for the respondents;

Osler, Hoskin & Harcourt LLP, Ottawa, Ontario, for the intervener, Canadian Recording Industry Association (CRIA);

Ogilvy Renault S.E.N.C., Montreal, Quebec, for the intervener, Neighbouring Rights Collective of Canada (NRCC).

This application was heard on September 25 and 26, 2001, at Ottawa, Ontario, before Linden, Evans and Sharlow, JJ.A., of the Federal Court of Appeal.

The decision of the Court of Appeal was delivered on May 1, 2002, when the following opinions were filed:

Evans, J.A. (Linden, J.A., concurring) - see paragraphs 1 to 194;

Sharlow, J.A., dissenting in part - see paragraphs 195 to 197.