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Canada’s Anti-Spam Law – New Guidance on Offering Apps, Software

Canada’s Anti-Spam Law (CASL) targets more than just email and text messages 

CASL also prohibits installing a “computer program” – including an app, widget, software, or other executable data – on a computer system (e.g. computer, device) unless the program is installed with consent and complies with disclosure requirements.  The provisions in CASL related to the installation of computer programs will come into force on January 15, 2015.

Application outside Canada

Like CASL’s email and text message provisions, the Act’s “computer program” installation provisions apply to persons outside Canada.  A person contravenes the computer program provisions if the computer system (computer, device) is located in Canada at the relevant time (or if the person is in Canada or is acting under the direction of a person in Canada).

Penalties

The maximum penalty under CASL is $10 million for a violation of the Act by a corporation.  In certain circumstances, a person may enter into an “undertaking” to avoid a Notice of Violation.  Moreover, a private right of action is available to individuals as of July 1, 2017.

CASL’s broad scope leads to fundamental questions – how does it apply?

The broad legal terms “computer program”, “computer system” “install or cause to be installed” have raised many fundamental questions with industry stakeholders.  The CRTC – the Canadian authority charged with administering this new regime – seems to have gotten the message.  The first part of the CRTC’s response to FAQ #1 in its interpretation document CASL Requirements for Installing Computer Programs is “First off, don’t panic”.

New CRTC Guidance 

The CRTC has clarified some, but not all of the questions that industry stakeholders have raised.  CRTC Guidance does clarify the following.

  • Self-installed software is not covered under CASL.  CASL does not apply to owners or authorized users who are installing software on their own computer systems – for example, personal devices such as computers, mobile devices or tablets.
  • CASL does not apply to “offline installations“, for example, where a person installs a CD or DVD that is purchased at a store.
  • Where consent is required, it may be obtained from an employee (in an employment context); from the lessee of a computer (in a lease context); or from an individual (e.g. in a family context) where that individual has the “sole use” of the computer.
  • An “update or upgrade” – which benefits from blanket consent in certain cases under CASL – is “generally a replacement of software with a newer or better version”, or a version change.
  • Grandfathering – if a program (software, app, etc.) was installed on a person’s computer system before January 15, 2015, then you have implied consent until January 15, 2018 – unless the person opts out of future updates or upgrades.

Who is liable?

CRTC staff have clarified that as between the software developer and the software vendor (the “platform”), both may be liable under CASL.  To determine liability, the CRTC proposes to examine the following factors, on a case-by-case basis:

  • was their action a necessary cause leading to the installation?
  • was their action reasonably proximate to the installation?
  • was their action sufficiently important toward the end result of causing the installation of the computer program?

CRTC and Industry Canada staff have indicated that they will be publishing additional FAQs, in response to ongoing industry stakeholder questions.

See:  fightspam.gc.ca  and consider signing up for information updates through the site.

 

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Canada’s Anti-Spam Law – New Guidance on Offering Apps, Software

Insensitive – Copyright Implications of Jann Arden’s Stand

Twitter began to light up on August 7, 2014 when Canadian singer/songwriter Jann Arden (@jannarden) began to object, via a series of tweets, to the practice of Calgary radio station 90.3 AMP of playing shortened versions of songs. From a CBC news story on the matter, the station “essentially slashes Top 40 songs in half so the station can run 24 songs an hour instead of 12”; evidently 90.3 AMP is drawing on the work of Sparknet Communications, which provides “Quickhitz™ remixes”. Arden’s objections eventually culminated in her call to boycott the station for “butchering” and “disrespecting” artists and their work.

Arden’s tweets were sometimes profane and often humorous – here’s one that we’re comfortable reproducing on a suitable-for-families blog and which pithily summarizes her concerns with the practice:

For the record, I know of no such art gallery.

The initial reaction of experienced entertainment lawyers to the story should have been: How can I make money off of this? Just kidding! No, the reaction of experienced entertainment lawyers to the story should have been: figuring out the legal implications of what’s going on here is going to be complicated. For this post, rather than get too far down any convenient rabbit holes, we’re going to limit ourselves to considering whether Ms Arden might be able to assert a legal claim on the basis that shortening her songs constitutes an infringement of her moral rights in the musical compositions she has written.

(Throughout this discussion it needs to be kept in mind that there are (at least) two separate copyrighted works at play here when we’re talking about a “song” being shortened and broadcast: the musical composition and the recording of that musical composition. We’re going to focus in this post only on the musical composition aspect, and ignore moral rights relating to the performance as well as copyright considerations relating to the sound recording.)

At first it might seem obvious that Arden could assert a moral rights-based claim against the station. As Section 28.2 of the Copyright Act provides,

The author’s or performer’s right to the integrity of a work or performer’s performance is infringed … if the work or the performance is, to the prejudice of its author’s or performer’s honour or reputation … distorted, mutilated or otherwise modified

We can see two different elements are required for an infringement of a songwriter’s right to the integrity of their composition: there must have occurred (1) a distortion, mutilation or modification of the work which (2) has a prejudicial effect on the author’s honour or reputation. Shortening a song clearly counts as a “modification” of a work – but how would we determine whether it had a “prejudicial effect” on the songwriter’s honour or reputation? It’s a bit hard to say: of the limited number of moral rights cases which Canadian courts have considered, some (such as Snow v Eaton Centre (1982), 70 CPR (2d) 105, wherein sculptor Michael Snow successfully claimed infringement of his moral rights when the managers of the shopping mall in which his sculptures of ducks in flight were festooned with red ribbons to mark the Christmas season) indicate that the artist’s own views are to be given considerable weight so long as they were “reasonably arrived at”; others (e.g., Prise de Parole Inc v Guerin, Editeur Ltee (1995), 66 CPR (3d) 257) indicate that an aggrieved composer needs to provide objective, expert evidence which corroborates the prejudicial effect. In either case, it probably wouldn’t be too terribly difficult to get Ms Arden to testify that she feels that her reputation has been besmirched or to find multiple experts who could testify that shortening a song could result in reputational damage.

But there’s a complicating factor here: it’s quite possible that Arden has waived her moral rights in a manner on which 90.3 AMP could rely. To understand why that might be the case it is important to remember that Arden likely does not own all of the copyright in the compositions she has written. That’s because at least some of the copyright in the compositions and almost certainly all of the administration rights in the compositions have been assigned to a music publisher. In the publishing agreements that she signed with her music publisher, Arden would likely have been obliged to waive her moral rights – not only in favour of the publisher, but in favour of any licensee or assignee of the music publisher’s rights. And on that basis, 90.3 AMP might be able to raise a defence: they might be able to argue that they obtained a license (whether written or implied by a course of conduct) from the music publisher to reproduce, modify and otherwise make use of the composition, and that they enjoy the benefit of the waiver of moral rights which Arden signed in favour of the publisher. Without knowing the actual arrangements in place between the broadcaster and the publisher, it’s hard to say anything definitive – we would certainly welcome further insights in the comments from anyone familiar with the situation.

One other possible target of a claim might be Sparknet Communications itself (i.e., the folks who actually do the editing of the songs) – it’s not clear what arrangements, if any, they have in place with the music publishers who own and administer the songs which are being edited.

The Twitter storm over 90.3 AMP appears to have subsided over the last couple of days – whether this ends up being merely an insensitive (see what I did there?) breach of etiquette or the basis for a claim, whether on moral rights or other copyright grounds, remains to be seen.

Insensitive – Copyright Implications of Jann Arden’s Stand

Tariffpalooza 2014

Summer 2014. The living is easy; the Copyright Board is certifying tariffs at a furious pace.

As we noted back in May 2014 (Towards Certainty on Webcasting – Re:Sound Tariff 8 Certified), the Board certified Re:Sound Tariff 8, applicable to non-interactive and semi-interactive webcasters (although not immediately apparent from the wording of the tariff, the tariff is intended to apply to audio services such as Pandora and Songza). Re:Sound’s Tariff 8 is already the subject of an application for judicial review and has been the impetus for an ongoing public debate about the appropriateness of the license fees set by the Copyright Board (see Music Canada (including the press release linked at the bottom of that page) and Michael Geist for opposing views of the issue).

On July 26, 2014 the Board certified SOCAN Tariff 4 (Board decision; Tariff), which covers venues hosting live musical performances (including, helpfully, lip synching and miming). For further details regarding licenses for public performance of music at “live events”, see this post from March 2013.

Most momentous, though, was the certification by the Board on July 19 of SOCAN Tariffs 22.D.1 and 22.D.2 (Board decision; Tariffs) – these apply, respectively, to “online audiovisual services” and “user-generated content”, meaning they apply to the biggest of the big fish of the online world: YouTube, Apple, Netflix, Facebook, Yahoo! and internet service providers such as Rogers, Bell and Shaw. Barry Sookman and James Plotkin have both offered insightful posts about the newly-certified tariffs.

Herewith, an attempt to summarize how new SOCAN Tariff 22.D.1 (Online Audiovisual Services) works:

Revenue Source Year Royalty Notes
Per-program fees to end-users 2007-2010 1.7% minimum of $0.013 per program communicated
2011-2013 1.9% as above
Subscriptions to end-users 2007-2010 1.7% where free trial offered, min. monthly fee of $0.068 per free trial subscriber
2011-2013 1.9% where free trial offered, min. monthly fee of $0.075 per free trial subscriber
“Internet-related revenues” (see tariff for definition) 2007-2010 1.7% x A x B x (1-C) A = internet-related revenues
B = (i) the ratio of audiovisual page impressions to all page impressions, if available, and (ii) if not, 0.95 for a music video service, and 0.75 for any other service
C =(i) 0 for a Canadian service, and (ii) for any other service, the ratio of non-Canadian page impressions to all page impressions, if that ratio is available, and 0.9 if not
2011-2013 1.9% x A x B x (1-C) as above
If revenues are obtained from all three sources, the service must pay royalties in accordance with each formula, but when calculating “internet-related revenues”, can exclude fees charged to end-users in the first two formulas and related page impressions. A service with no revenues is obliged to pay $15.00 per year.

It should also be noted that the tariff imposes significant reporting obligations on those liable to pay royalties pursuant to the tariff.

Tariff 22.D.2 (User-generated content) is, thankfully, much simpler to summarize:

Year Royalty Notes
2007-2010 1.7% of “relevant revenues” “relevant revenues” means all revenues generated by all visits to watch pages on a site by end users having Canadian IP addresses,
irrespective of whether the content that is subject to those visitscontains any musical works or other audio content or any musical works in the repertoire of SOCAN, including membership,
subscription and other access fees, advertising, product placement, promotion, sponsorship, net revenues from the sale of goods
or services and commissions on third-party transactions, but excluding:
(a) revenues generated from the transmission of pay content;
(b) revenues that are already included in calculating royalties
pursuant to another SOCAN tariff;
(c) revenues generated by an Internet-based activity that is subject to another SOCAN tariff;
(d) agency commissions;
(e) the fair market value of any advertising production services
provided by the user; and
(f) network usage and other connectivity access fees. A service with no relevant revenues is obliged to pay $15.00 per year.
2011-2013 1.9% of “relevant revenues” as above

Thus far, SOCAN Tariffs 22.D.1 and 22.D.2 appear not to have generated anywhere near the uproar that Re:Sound Tariff 8 has – but whether these tariffs will be the subject of judicial review remains to be seen. As with all matters relating to online uses of music in Canada, service providers are advised to consult with an expert.

Tariffpalooza 2014

Towards Certainty on Webcasting – Re:Sound Tariff 8 Certified

We inch closer to certainty regarding what royalty rates are payable in Canada by online webcasting services such as Pandora, Songza and Last.fm.

On May 16, 2014, the Copyright Board of Canada released Re:Sound Tariff 8, applicable to non-interactive and semi-interactive webcasts for the years 2009-2012. Re:Sound is a collective which collects “equitable remuneration” payable to performers and the owners of sound recordings for the public performance or telecommunication to the public of sound recordings on which performances of musical works are embodied.

The Board released the tariff itself, a 227-paragraph decision, and a plain English “fact sheet”.

Before setting out the rates themselves, a few notes:

  • as the Board describes in para. 7 of its decision, streaming music over the internet can involve “as many as six rights or sets of rights”; which is to say: this is complicated stuff, and should not be navigated without the assistance of someone with a solid understanding of the various rights at play, who owns/administers those rights and what the current state-of-play is with respect to the various proposed and certified Copyright Board tariffs which might apply
  • Re:Sound Tariff 8 covers only “equitable remuneration to which performers and makers are entitled when a published sound recording of a musical work is communicated to the public by telecommunication”; which means that…
  • Re:Sound Tariff 8 does not cover “the right to communicate a musical work to the public by telecommunication; the right to reproduce a musical work; the right to reproduce a sound recording; the right to reproduce any reproduction of an authorized fixation of a performer’s performance for a purpose other than that for which the authorization was given; the rights granted, on November 7, 2012, to Canadian performers and makers over the communication resulting from making available a sound recording to the public”; all of those rights might (or might not!) be the subject of a different tariff which might (or might not!) be in some stage of proposal, discussion, certification, appeal, etc.; tread carefully!
  • as much grief as I sometimes give the Copyright Board, the reasons for the decision actually make for some interesting reading (well, relatively speaking, of course – I’m sure you’ve got better things to do with your time, but I don’t)

Without further ado, the rates payable to Re:Sound by non-interactive and semi-interactive webcasters, set for 2009-2012 by Re:Sound Tariff 8:

Licensee Rate Minimum Fee
CBC 13.1¢ per 1,000 plays $100 per year
Commercial webcaster 10.2¢ per 1,000 plays $100 per year
Community/non-commercial webcaster N/A $25 per year

 

Two additional points to consider, both taken from the Board’s “fact sheet”:

  • “In the United States, for 2012, the rate that webcasters must pay for the same rights when their sole business is webcasting is $1.10 per thousand plays” – so, basically, the Canadian rate, “for the same rights” is roughly 10% of the US rate; make of that what you will. The Board spends a fair amount of time in its decision (see paras. 119ff) explaining why the Board arrived at a such a strikingly different rate as compared to the US rate.
  • the Board’s “fact sheet” contains a very interesting table (see question 7 in the “fact sheet”) which sets out how much the Board anticipates certain users will pay under the certified tariff; most noteworthy: the Board’s estimate is that Pandora, classified as a “very large webcaster”, with 3 billion plays per year, would pay around $306,000 per year to Re:Sound under Tariff 8 as certified, and the Board estimates that a “very large webcaster” would reap annual revenues of $5.8 million – so a little over 5% of annual revenues would be payable to Re:Sound; again, note that Tariff 8 covers only a subset of all the rights which Pandora would need to clear

 

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Towards Certainty on Webcasting – Re:Sound Tariff 8 Certified

SOCAN Announces New Arrangement for YouTube Revenues

In early November, SOCAN (the Canadian performing rights collective) announced the entering into of a new agreement which probably should have garnered more attention than it did: YouTube earnings unlocked for SOCAN members.

The basics of the new arrangement are this: SOCAN has entered into an agreement with Audiam, an organization which licenses “synchronization” right in compositions and recordings (as described in the Audiam FAQ), to collect revenues from YouTube arising from the use of songs in videos uploaded to YouTube. Audiam itself has evidently entered into an arrangement with YouTube for the license of the “synchronization” rights in compositions and recordings  – the “synchronization” right is the right to control the “pairing” or “synchronizing” of compositions or recordings with visual elements; when a recording of a song is used in a video, a license is required from the owners of rights in the composition and the recording of that composition (if just the composition is used, e.g., when a video consists of the live performance of a composition, then just the license from the owner of rights in the composition is required). The revenue in question arises from advertising revenues which YouTube collects for ads which are shown in conjunction with the revenues. SOCAN will be collecting from Audiam revenues payable to the owners/administrators of rights in the compositions (presumably the owners of the rights in the recordings will be contracting directly with Audiam or YouTube). Notably, the Audiam arrangement includes revenues from what I’ll call “unauthorized” videos – in other words, Audiam collects revenues not just from “official” videos which the copyright owners have created and uploaded to YouTube, but from “user-generated” videos, such as the proverbial “dancing baby” video where someone uses a song in conjunction with a video the user themselves has created.

A number of elements make this new arrangement and announcement notable, including the following:

  • SOCAN is generally not associated with the collection of synchronization revenues, as that has in the past been something which publishers have either administered themselves or licensed through the CMRRA (Canadian Musical Reproduction Rights Agency) – in other words, this deal with Audiam represents an expansion of the scope of rights historically administered by SOCAN
  • as the SOCAN announcement notes, “Earlier in 2013, SOCAN granted YouTube a performing rights license for Canada covering the years from 2007 to the present” – that appears to be a bespoke license granted by SOCAN to YouTube, outside the Tariff 22 structure
  • one factor not addressed by the announcement (and there’s no reason to expect that it should or would have been) is how this interfaces (or not) with the “Non-Commercial User-Generated Content”  provision found in Section 29.21 of the Copyright Act (Canada) – that provision had been referred to by many (including me) using the short-hand “YouTube exception”; might this be taken as an admission that YouTube itself cannot rely on the shelter provided by Section 29.21?

A move away from the “omnibus” tariff process and towards “bespoke” licensing arrangements seems important and one worth further discussion – it will be interesting to see whether similar future SOCAN announcements will be made with respect to other online platforms.

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SOCAN Announces New Arrangement for YouTube Revenues