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A Brief History of the Broadcast Reproduction Right

The following is a timeline of broadcast reproduction copyright developments, leading to yesterday’s Supreme Court of Canada decision in CBC v. SODRAC.

1980’s: SODRAC, a copyright collective society managing (largely French-language) music reproduction rights, licences the reproduction of musical works in its repertoire to television producers.

1990: Bishop v. Stevens [1990] 2 S.C.R. 467 – The Supreme Court determines that “ephemeral” copies made by a TV broadcaster engage the reproduction right under the Copyright Act. Making copies of musical works to facilitate a broadcast, and actually broadcasting musical works, engage two different rights. Each of those rights may be licensed and paid for separately. Following this decision, SODRAC begins to distinguish between synchronization licences and copies made for other purposes.

1992: CBC and SODRAC negotiate a licence agreement for all copies made by CBC – synchronization and any other copies – for radio and TV. According to SODRAC, this is the first general reproduction rights agreement with a radio and television broadcaster in North America.

1990’s: CBC and other broadcasters begin to make greater use of digital systems to prepare programming for broadcast, gradually replacing older analog systems.

2002: Théberge v. Galerie d’Art du Petit Champlain inc. [2002] 2 S.C.R. 336 – The Supreme Court examines the nature of the reproduction right (must a work be multiplied to be ‘reproduced’? – yes) and emphasizes the balance between the rights of users and copyright owners:

“The proper balance among these and other public policy objectives lies not only in recognizing the creator’s rights but in giving due weight to their limited nature. In crassly economic terms it would be as inefficient to overcompensate artists and authors for the right of reproduction as it would be self-defeating to undercompensate them. Once an authorized copy of a work is sold to a member of the public, it is generally for the purchaser, not the author, to determine what happens to it.”

November 2012: Copyright Board SODRAC-CBC Arbitration Decision – The Board confirms that broadcast-incidental copies are reproductions under the Act, and do not benefit from a statutory exception. The Board finds that there are “clear benefits [to CBC] from copy-dependant technologies”, and SODRAC is entitled to remuneration that reflects those benefits.

November 2012: The Copyright Modernization Act – a broad set of amendments intended to better reflect copyright in the context of modern technologies – enter into force. Among other things, the “ephemeral exception” for broadcast copies is amended and expanded in part.

December 2012: Entertainment Software Association v. SOCAN [2012] 2 S.C.R. 231 – In one of the 2012 “pentalogy” of copyright cases, the Supreme Court determines that the Copyright Board was incorrect to apply a separate “communication” tariff – over and above the reproduction right payment – to downloads of musical works for video games. The principle of technological neutrality requires that the Copyright Act apply equally between traditional and more technologically advanced media.

“There is no practical difference between buying a durable copy of the work in a store, receiving a copy in the mail, or downloading an identical copy using the Internet. Absent evidence of Parliamentary intent to the contrary, we interpret the Act in a way that avoids imposing an additional layer of protections and fees based solely on the method of delivery of the work to the end user. To do otherwise would effectively impose a gratuitous cost for the use of more efficient, Internet-based technologies. The Internet should be seen as a technological taxi that delivers a durable copy of the same work to the end user. The traditional balance in copyright between promoting the public interest in the encouragement and dissemination of works and obtaining a just reward for the creators of those works should be preserved in the digital environment.”

January 2013: Copyright Board Interim SODRAC-CBC Arbitration Decision – The Board extends the 2008-2012 licence on an interim basis pending its final determination of terms to 2016. The Board rejects CBC’s argument that the Copyright Modernization Act amendments provide a statutory exception for its broadcast-incidental copies.

March 2014: CBC v. SODRAC Federal Court of Appeal, [2015] 1 F.C.R. 509. The Federal Court of Appeal rejects the broadcasters’ argument that the Supreme Court’s decision in ESA has overtaken Bishop v. Stevens. Broadcast copies are reproductions under the Act. The Court states, however, that it is “difficult to know how one is to approach technological neutrality post-ESA”, and finds that Bishop v. Stevens determines the outcome unless Bishop is “overturned or disavowed by the Supreme Court”.

November 2015: CBC v. SODRAC Supreme Court 2015 SCC 57.  In a 7-2 split decision, Justice Rothstein, for a majority of the Supreme Court, confirms that broadcast-incidental (or “ephemeral”) copies that facilitate broadcasting are reproductions under the Copyright Act. The bulk of the decision then focuses on valuation of the reproduction right. The majority finds that the Board failed to take the principles of technological neutrality and balance into consideration when setting the fees for the copies.

The majority expressly responds to the Court of Appeal’s call for guidance on how to approach technological neutrality.  Pursuant to ESA, if there is no practical difference in the value to a user as between its old and new technologies, then there should be no difference in valuing the right. The Copyright Board should compare the value derived by the user from the use of the reproduction, considering older and newer technologies. In the present case, if CBC derives greater value from using broadcast-incidental copies in digital technology than it did with its old analog technology, then the copright owner has become entitled to greater royalties for the copies.

The majority recalls that in Théberge, the Court established that copyright law maintains a balance between the rights of copyright owners and users, and that it would be as inefficient to overcompensate artists as it would be self-defeating to undercompensate them. Relevant factors in valuation include the user’s risk and investment in using new technologies, and how making reproductions contributes to value to the user. In this case, the user’s risk and investment were high, and the value of the reproductions to the user were low.  The matter of valuation is sent back to the Copyright Board for reconsideration.

Justice Abella writes a vigorous dissent, agreed to in part by Justice Karakatsanis. The dissent takes issue with the majority’s approach to the principle of technological neutrality, which effectively ties copyright owner compensation to users’ actions that are irrelevant to the rights, and focuses on the value that new technologies create for the user. The dissent distinguishes “media neutrality” (focused on the medium of expression) from “functional equivalence” (focused on what the technology actually does), stating that functionally, broadcast-incidental copies are simply part of the core activity of broadcasting. Just as the Court confirmed in ESA, “technological neutrality operates to prevent imposing additional, gratuitous fees on the user simply for the use of more efficient technologies” […] “SODRAC is not entitled to be compensated for how efficiently CBC uses technology to achieve its broadcast”. The Board’s decision to impose fees for broadcast-incidental copies is unreasonable.

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A Brief History of the Broadcast Reproduction Right

Online Endorsements and “Astroturfing”

Having warned consumers: “Don’t buy into fake online endorsements” last year, the Competition Bureau sent a strong message to the media and marketing industry against astroturfing yesterday.  The Bureau announced that it has entered into a consent agreement with Bell Canada addressing employee-generated reviews and ratings of Bell apps on the iTunes App Store and the Google Play Store.  While Bell reportedly moved quickly to have the reviews and ratings taken down, the Competition Bureau evidently considered that the damage was already done:

“these reviews and ratings created the general impression that they were made by independent and impartial consumers and temporarily affected the overall star rating for the apps.”

Bell has agreed to pay an administrative monetary penalty of $1.25 million and has committed to enhance its corporate compliance program.  The company also proposes to host a workshop to promote “Canadians’ trust in the digital economy”, including online review integrity.

The Canadian Competition Act contains criminal and civil prohibitions against materially false or misleading representations.  The general impression conveyed by the review, rating, tweet, post or other representation is a key element of determining whether it is misleading.

As part of its education, outreach and enforcement programs, the Bureau recently devoted its first edition of The Deceptive Marketing Practices Digest to online advertising, with a focus on online reviews.  The Bureau made a point of noting that “astroturfing is a problem that crosses borders” and highlighting its “excellent working relationship” with its international partners, including the US Federal Trade Commission.   In yesterday’s announcement, the Bureau invited consumers who believe that they have been misled by fake online reviews to call the Bureau’s Information Centre or to file a complaint on its website.

The recent activity and statements around online reviews make it very timely to revisit (or develop) internal compliance policies.  These can include examples of acceptable and unacceptable practices for reviews and ratings, endorsements, disclaimers, and special promotions such as sponsorships and contests.

See also:

 

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Online Endorsements and “Astroturfing”

The Complexities of Canada’s Extension of Copyright Protection for Sound Recordings

On June 23, 2015, Royal Assent was given to Parliament’s Bill C-59, otherwise known as the Economic Action Plan 2015 Act, No. 1, otherwise known as the federal government’s 2015 budget. Contained in the legislation are provisions which amend the Copyright Act (Canada) to extend the duration of Canadian copyright protection for sound recordings. For how long has copyright protection been extended? Well… it’s complicated – most reports have described the change as extending protection from 50 years to 70 years; but that description is incomplete. A more complete description would say that copyright protection for sound recordings has been extended from 50 years from the end of the calendar year in which recording (or “fixation”) occurred to 70 years from the end of the calendar year in which publication occurs. But even that remains incomplete – here is a chart which attempts to summarize the changes (which are found in Sections 81 and 82 of Bill C-59, and which replace Sections 23(1)(b) and 23(1.1) of the Copyright Act):

Duration of Canadian Copyright in Sound Recordings

Activity

Copyright Act

Recorded (but no publication)

Publication

Before June 23, 2015 50 years 50 years
After June 23, 2015 50 years Earlier of (i) 70 years from publication and (ii) 100 years from recording

 

“Publication” is defined in Section 2.2 of the Copyright Act as meaning “making copies of a sound recording available to the public”; but the provision goes on to say that “publication” does not include “the performance in public, or the communication to the public by telecommunication” of a sound recording. That has some interesting implications for what I’ll call “amateur” or “non-commercial” sound recordings. As you can see from the foregoing table, while most “commercial” sound recordings (such as the recordings released by a major record label) will benefit from a term of protection of at least 70 years from the year of publication (i.e., the year in which the record was “released” for commercial sale to the public), a 70 year term will not apply to many “amateur” or “non-commercial” sound recordings unless copies of them are made available to the public. So, for example, the sound recording that you create when you play a cover song in your bedroom and then upload to YouTube – that will only be protected for a period of 50 years from the year of recording, because uploading a clip to YouTube does not constitute “publication” for purposes of the Copyright Act (in order to obtain the full 70 year term of protection, you’d have to make copies of the recording “available to the public”, for instance by offering CDs for sale (or files for digital download). It is therefore dangerous to assume that all sound recordings will benefit from a 70 year term of protection – some will have only a 50 year term (i.e., recordings for which “publication” never occurs, or only first occurs more than 50 years from the year of recording), while others will be protected for 70 years from the year of public release, which may be much later than the year of initial recording.

The new provisions also cap the duration of protection: not every sound recording which achieves “publication” will benefit from 70 years of protection from the year of its publication – there is an “outside date” of 100 years from the year of recording. Let’s imagine a sound recording which takes place in 2015 in the course of the creation of a new album by, say, current Canadian star Shawn Mendes; we’ll call the track “Party’s Over”. Upon recording (or “fixation”) of the track, “Party’s Over” will benefit from a period of copyright protection equal to 50 years (i.e., copyright would expire on December 31, 2065). If “Party’s Over” gets released by Shawn’s record company to the public in 2015, then the track will benefit from a period of copyright protection equal to 70 years (i.e., copyright would expire on December 31, 2085). But let’s imagine that the record company is unhappy with “Party’s Over” for some reason, and elects not to release it to the public – instead they elect to “keep it in the vault” so to speak. In the absence of publication, the track will still benefit from the “default” period of protection of 50 years, unless and until copies of it are made available to the public (i.e., “publication” occurs), in which case it will benefit from a period of copyright protection expiring on the earlier of 70 years from the year of publication or 100 years from the year of recording. So, if “Party’s Over” gets released to the public as part of a Shawn Mendes “Greatest Hits” package in, say, 2020, then it will be protected by copyright until 2090 (i.e., 70 years from publication) – but if the track doesn’t get released until, say, 2050 (as part of career retrospective, let’s say), then it will be protected until 2115 (i.e., 100 years from fixation), not 2120 (i.e., 70 years from publication). Trust me, this kind of thing is going to be giving lawyers conniptions for decades to come.

There are two other aspects to the amendments to the Act which bear attention:

  • there is no “revival” of copyright in sound recordings whose protection had expired on December 31, 2014 – anything which was in the public domain on June 23, 2015 remains in the public domain
  • the amendments also have the effect of extending the duration of copyright protection in certain performer’s performances which are fixed in a sound recording – while the “default” duration of protection for performances remains at 50 years, if a sound recording in which the performance is fixed is published before the copyright expires, the copyright in the performances continues until the earlier of (i) the end of 70 years after the end of the calendar year in which the publication occurs and (ii) the end of 100 years after the end of the calendar year in which the fixation of the performance (i.e., the recording) occurred

UPDATE: June 25, 2015 – I have revised the table to correct a possible misinterpretation: the left-most column is not intended to set out the year of the recording, but rather the year of the Copyright Act, with the goal of showing the change as between the Copyright Act before the 2015 budget, and the Copyright Act after the 2015 budget. For clarity, any sound recording which was still protected by copyright in 2015 will be subject to the new regime – the analysis is not different for sound recordings created before the budget implementation bill received Royal Assent on June 23, 2015.

The Complexities of Canada’s Extension of Copyright Protection for Sound Recordings

Trivial Thoughts on Substantial Parts

What constitutes a “substantial part” of a copyrighted work is an endlessly diverting question – both because copyright law tends not to draw “bright lines” (meaning that lawyers are forever doomed to conducting “quantitative” and “qualitative” analyses) and because clients routinely want definitive answers which drive lawyers to distraction (“what do you mean you don’t know whether a fifteen-second clip from a movie infringes copyright?”). Canadian courts have been remarkably (but understandably!) coy in fashioning their interpretations of that portion of Section 3(1) of the Copyright Act which states that copyright means “the sole right to produce or reproduce the work or any substantial part thereof“. The Copyright Board’s recent decision (released May 23, 2015) in the Access Copyright (Provincial and Territorial Governments) 2005-2014 tariff provides some examples of a decision-maker assigning some numbers to the notion of a “substantial part”.

“Substantial part” could be seen to operate as a euphemism – in some ways it’s simply a substitution for “non-trivial”, “important” or “significant”. Thus, the Supreme Court of Canada in the CCH v LSUC (2004 SCC 13) decision stated, in its discussion of fair dealing, that where “the amount taken from a work is trivial, the fair dealing analysis need not be undertaken at all because the court will have concluded that there was no copyright infringement” – “substantial part” operates as a threshold matter for whether we are in the realm of copyright infringement at all. If something less than a “substantial part” has been copied, the copier has not encroached on the exclusive rights of the copyright owner in the first place. The concept of “substantial part” bears impressive gate-keeping powers. It is usually wielded via impression: the Supreme Court itself has described it as “a flexible notion … a matter of fact and degree”, to be decided “by its quality rather than its quantity” (see Robinson v Cinar, 2013 SCC 73 at para. 26). It is thus noteworthy when we are provided with a decision which seems to indicate where we can “draw the line” so to speak in determining what constitutes a “substantial part”.

In its Access Copyright tariff reasons, the Copyright Board stated the following in the context of determining a “substantial part” of a literary work (emphasis added):

[115] In this matter, without the benefit of a qualitative analysis of each of the copied works, and without even knowing which portions of a work were copied, in our opinion the amounts proposed by the Consortium, being 1 to 2 pages of a work, are reasonable approximations in establishing non-substantiality. However, since 1 to 2 pages of a short work can amount to a great portion of that work, we further limit this approximation by requiring that the copying of 1 to 2 pages not constitute more than 2.5 per cent of the entire work, the percentage equivalent to what the Board had previously considered not to be substantial reproductions in its Satellite Radio Services decision.

The final reference there is worth highlighting, as it offers a lens into a different type of work – for that we turn to paras. 97-98 of the Copyright Board’s reasons for its decision in Statement of Royalties to Be Collected by SOCAN, NRCC and CSI in Respect of Multi-Channel Subscription Satellite Radio Services (6 May 2009, Corrected Version):

[97] Thus, the question is reduced to whether the 4 to 6 second buffer is a substantial part of an entire work. The rolling 4 to 6 seconds of a musical work is not an aggregate of an entire work. At no time does a subscriber possess a series of 4 to 6 second clips which when taken together would constitute a substantial part of the work. It matters not that over time the totality of all works transmitted are reproduced. We are dealing with a rolling buffer and at no time can we line up all of the fragmented copies amounting to one complete copy of a musical work. At no point in time can one extract from the RAM of the receiver more than 4 to 6 seconds of a song (or more accurately of a signal). More importantly, at no time is there a choice as to what goes in there or when it comes out.

[98] In our opinion, the 4 to 6 second buffer fails to satisfy the substantiality requirement. It is not a substantial part of the protected work.

To summarize: in the view of the Copyright Board, 4-6 seconds of the average pop song with a duration of a few minutes is not a “substantial part” of a musical work/sound recording, and 1-2 pages of a literary work falls below the substantiality threshold, so long as that 1-2 pages does not constitute more than 2.5% of the work in question. I don’t want to make too much of these holdings – Copyright Board decisions are not court decisions, and the Access Copyright decision, in particular, is qualified in the Board’s own words as being without the benefit of a quantitative analysis. The 2015 Access Copyright decision may yet be appealed to the Federal Court. Assessing the “substantial part” of a musical work is inherently going to be a much more impressionistic exercise (because the “valuable” part of the song, such as the chorus, is usually more finite than the valuable part of a literary work). But for the moment, these two decisions at least provide some indication of where the substantiality threshold might lie, or, at worst, an indication of where to begin the assessment.

Trivial Thoughts on Substantial Parts

Ontario “Grandfathers” Tax Credit Rate Changes

When Ontario announced its 2015 budget (for earlier Signal coverage see here), one particular proposed change was met with… well, let’s call it “concern” from the Ontario film and television production community: the reduction of the OPSTC and OCASE tax credits from 25% and 20% to 21.5% and 18%, respectively, was effective immediately (i.e., on April 23, 2015). In a production environment which prides itself on the stability of its tax credit regime, and given the long lead-times by which production scheduling occurs, a reduction with immediate effect would have had significant, in some cases even catastrophic, impact on film and TV projects (to say nothing of sending a cold wind blowing through the accountants’ offices where decisions about whether to film in Ontario are made). Following vigorous lobbying, however, the Ontario government has implemented a “grandfathering” mechanism which will apply the old rates to certain productions.

Grandfathering of OPSTC (Ontario Production Services Tax Credit)

The rate of 25% will apply to qualifying production expenditures  incurred after April 23, 2015 and before August 1, 2016 if the following criteria are satisfied:

  1. The production company must have entered into at least one qualifying written agreement in respect of a qualifying production expenditure.
  2. The qualifying written agreement must be entered into with a person at arm’s length with the production company.
  3. The qualifying written agreement must satisfy one of the following criteria: (a) an agreement for the services of a producer, a director, a key cast member, a production crew or a post-production crew; (b) an agreement in respect of a studio located in Ontario or a location in Ontario; or (c) the agreement “demonstrates, in the opinion of the Minister of Tourism, Culture and Sport, that the corporation has made a significant commitment to production activities in Ontario”.
  4. The production company must apply to the OMDC for a certificate in respect of the production.
  5. Principal photography or key animation must commence before August 1, 2015.

Grandfathering of OCASE (Ontario Computer Animation and Special Effects Tax Credit)

The rate of 20% will apply to qualifying production expenditures  incurred after April 23, 2015 and before August 1, 2016 if the following criteria are satisfied:

  1. The production company must have entered into at least one qualifying written agreement in respect of a qualifying production expenditure.
  2. The qualifying written agreement must be entered into with a person at arm’s length with the production company.
  3. The qualifying written agreement must satisfy one of the following criteria: (a) it is in respect of digital animation or digital visual effects for use in the eligible production; or (b) the agreement “demonstrates, in the opinion of the Minister of Tourism, Culture and Sport, that the corporation has made a significant commitment to production activities related to the eligible production in Ontario”.
  4. Before August 1, 2015, the corporation has notified the Ontario Media Development Corporation in writing of its intent to apply for a certificate in respect of the eligible production. (NB: note the difference here between OPSTC and OCASE on this point – for OPSTC the application itself must actually have been filed by August 1, 2015, but for OCASE there only must be written notice of intent to apply for a certificate)
  5. Before August 1, 2016, the corporation has applied to the Ontario Media Development Corporation for a certificate in respect of the eligible production.
  6. Principal photography or key animation must commence before August 1, 2015.

“Transitional Grant” Program

The government also announced that productions which commence principal photography/key animation on or after August 1, 2015 (i.e., too late to access the grandfathered rates noted above) but before December 1, 2015 (i.e., the last day on which principal/key can be commenced is November 30, 2015), and which otherwise meet the criteria identified above, will have access to “a separate transitional mechanism outside of the Taxation Act” – details to follow.

[The foregoing information is taken from an OMDC bulletin circulated on Monday, May 25, 2015, and available online here.]

Ontario “Grandfathers” Tax Credit Rate Changes