Music biz loses Net royalties fight
The music industry’s efforts to recoup money lost from Internet piracy were thwarted yet again Wednesday.
The Supreme Court of Canada ruled that Internet service providers don’t have to pay royalties to composers and performers for music downloaded or heard via online radio by web customers.
In a 9-0 judgment Wednesday, the court said companies providing wide access to the web are merely “intermediaries” who are not bound by federal copyright legislation.
At issue was an effort by the Society of Composers, Authors and Music Publishers of Canada (SOCAN) to force Internet service providers to pay a tariff — known as Tariff 22 — for music accessed in the online world whether downloaded or streamed for online radio.
The case dates back to 1995, a few years before Napster revolutionized the way fans get their hands on tunes.
The judges noted, however, that Canadian copyright law is archaic and invited Parliament to update it to meet the needs of the modern information age.
It’s a message that’s been reiterated by several courts in the past few years.
SOCAN said Wednesday’s ruling contained some good news for the organization, which collects royalties on behalf of 70,000 Canadian composers, songwriters, lyricists and publishers.
The Supreme Court left the door open for recording artists to sue specific websites that distribute their music without authorization.
That could apply even to sites in other countries, as long as the end users are Canadian or there is some other “real and substantial” connection to Canada.
“We’re pleased. Now we can proceed with phase two of this process to have a royalty set,” said Paul Spurgeon, general counsel for SOCAN. “We’re going full steam ahead.”
The case has been closely watched — by international as well as domestic observers — because of its potential impact on the recording and computer industries worldwide. A different decision could have seen foreign ISPs paying Canadian copyright holders.
Opposing the effort was the Canadian Association of Internet Providers, including the Canadian subsidiaries of some of the world’s high-tech giants like Bell, Sprint, AOL, MCI, IBM and Yahoo.
The service providers, or ISPs, argued that artists should seek royalties directly from websites that offer their works, not from the companies that provide wider-ranging access to the web.
Luc Lavoie, vice-president of Quebec media holding company Quebecor Inc., welcomed the high court ruling on Wednesday.
“We’re absolutely pleased by it, but it doesn’t mean the fight against piracy is over,” said Lavoie, whose company owns Montreal-based Videotron, a major Internet service provider.
Lavoie said ISPs have been wrongly targeted by music companies.
“There’s no difference between doing this (piracy) or using the telephone,” said Lavoie.
“You cannot blame the telephone company because criminals are speaking to one another over the phone.”
He said ISPs are fighting music piracy with a wide-ranging information campaign.
SOCAN’s battle contrasted with the legal route taken by the recording industry in the United States, where the usual tactic has been to sue particular file-sharing services and the individual customers who download music from them.
The attempt to collect instead from ISPs was significant because they provide an easier target for litigation than tracking down a myriad of individual websites and customers.
“ISPs have the deepest pockets,” explained Casey Chisick, a copyright and entertainment lawyer in Toronto.
He said while SOCAN can now go after online radio sites and other various websites that play music, it will be an expensive process to recoup royalties.
“The trouble is that it becomes a lot more difficult and a lot less streamlined,” he said. “The transaction costs could be huge.”
Justice Ian Binnie, writing for the Supreme Court, noted the United States, Australia and the European Union have updated their copyright rules to deal specifically with Internet issues.
Canadian judges are struggling to apply legal principles first enunciated in the 1880s to “technologies undreamed of by those early legislators,” wrote Binnie.
His interpretation was that — as a general rule — the Copyright Act does not impose legal liabilities on ISPs, as long as they act as true intermediaries and take no hand in determining web content.
They could become liable, however, if they are formally notified that a particular website is violating the law, and if they refuse to block access to it.
The best way to deal with that, Binnie said, would be for Parliament to legislate specific rules for “notice and take down,” as the United States and Europe have done.
The court also laid down broad rules for potential lawsuits against file-sharing and other services that actually stockpile and distribute music to web customers.
Binnie said a range of factors would have to be taken into account in such cases, including where the content originates, whether the ISP is located in Canada and whether the end user is in Canada.
Those principles could provide a blueprint for future legal efforts to combat music downloading.
They do not, however, deal directly with other contentious issues such as the availability of child pornography on the web — a hot-button issue in the recent federal election.
The judgment Wednesday was based on copyright considerations and did not touch on the separate Criminal Code provisions on child porn.
It hasn’t been a very good year for Canada’s music industry. In March, the Canadian Recording Industry Association, which represents record labels, lost a bid to access names and addresses of people it believed were uploading music to the Internet for others to copy freely.
The organization is appealing the decision.
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