Fleck's Five: SCC ruling number 1 - free music previews

Our very good friend, lawyer and fellow blogger Lorraine Fleck (Hoffer Adler LLP, Toronto) has been working furiously away to produce some commentary and explanation on some significant developments in Canadian copyright law -- the handing down by the Supreme Court of Canada of five major decisions on fair dealing defences to an action for copyright infringement. The 1709 Blog is delighted to be able to share Lorraine's efforts with its own readers.

Supreme Court of Canada: Free Music Previews Do Not Infringe Copyright

This is the first in a series of five posts about the Supreme Court of Canada’s copyright decisions released on July 12, 2012.

On Thursday, July 12, 2012, the Supreme Court of Canada (SCC) issued its decision in Society of Composers, Authors and Music Publishers of Canada et al. v. Bell Canada, et al., 2012 SCC 36.

Background

The Society of Composers, Authors and Music Publishers of Canada (“SOCAN”) administers the performing and communication rights of composers, authors and music. SOCAN filed proposed copyright levy tariffs with Canada’s Copyright Board for the assessment of royalties to be paid when musical works are communicated to the public via the Internet. The tariff included royalties for the downloading of musical works but not free music previews (30 – 90 second excerpts of musical works that can be listened to by consumers prior to purchasing the music). The Copyright Board found that the previews were not infringing, ruling that the previews were “fair dealing” under Canadian copyright law. “Fair dealing” is an activity which allows users of copyright materials to engage in activities that might otherwise constitute copyright infringement.

SOCAN appealed the Copyright Board’s decision to the Federal Court of Appeal. The Federal Court of Appeal upheld the Copyright Board’s decision. SOCAN then appealed to the SCC. The Respondents on the SCC appeal included some of Canada’s largest telecommunication companies – Bell Canada, Rogers Communications Inc., Rogers Wireless Partnership, Shaw Cablesystems G.P. – as well as Apple Canada Inc., the Entertainment Software Association and the Entertainment Software Association of Canada.

The SCC unanimously dismissed the appeal, finding that the previews constitute fair dealing under the Copyright Act. The SCC applied its fair dealing test set out in CCH Canadian Ltd. v. Law Society of Upper Canada (here, known to Canadian copyright lawyers as the “law library photocopy case”). The rationale behind the fair dealing analysis is to determine if the proper balance has been achieved between the protection of the exclusive rights of authors and copyright owners vs. public access to copyright works. The fair dealing test has two steps:

1. Is the dealing for the purpose of either “research” or “private study” (the two fair dealing purposes allowed under the Copyright Act)? While the SCC in the CCH Canadian case did not exhaustively define “research”, it did state that the term “research” must be given a “large and liberal interpretation in order to ensure that users’ rights are not unduly constrained”.

2. Is the dealing “fair”? Factors in assessing fairness include: the purpose, character, and the amount of the dealing; the existence of any alternatives to the dealing; the nature of the work; and the effect of the dealing on the work.

The SCC, in applying the fair dealing test in the present case, made the following pronouncements.

 “Research” need not be for creative purposes only, as doing so would ignore one of the Copyright Act’s objectives – the dissemination of the works themselves.

 Limiting “research” to creative purposes would also run counter to the ordinary meaning of research, which includes many activities which do not require the establishment of new facts or conclusions.

The SCC ruled that the Copyright Board properly applied step 1 of the test when it considered the previews from the perspective of the consumer’s purposes – i.e. conducting research to identify which music to purchase. The service providers facilitated the consumer’s research purposes. Further, there were safeguards in place to ensure that the previews were used only for research purposes.

With respect to step 2 of the test – the character of the dealing – the SCC found that the dealing was fair for the following reasons.

* Consumers do not keep a permanent copy of the music preview, since the file is streamed and automatically deleted from the user’s computer once the preview is heard. This prevents further dissemination or duplication of the preview.

* The amount of the dealing – streaming a preview of several seconds – is modest when compared to the whole work. The amount of the dealing is to be assessed by examining how much of the music each consumer previews, as opposed to the aggregate number of previews by consumers.

* There are no alternatives to the dealing that as effectively demonstrate to a consumer what a musical work sounds like. The previews are therefore necessary in assisting consumers in determining what music to purchase. As the music will not be purchased unless potential customers cannot locate and identify the music they want to buy, the previews actually increase the sale and dissemination of the copyrighted musical works.

Significance

The SCC’s decision not only clarifies whether free music previews infringe copyright, the decision also allows online music stores – such as Apple’s – to continue to offer the same free music previews they do in other markets. A finding that the previews infringe copyright would have caused significant disruptions for both online music companies and their consumers. The decision, by analogy, should also allow providers of non-music copyright content to offer similar free previews to consumers, facilitating e-commerce in copyright works.

This post can also be found on Lorraine's IP Address blog, here.