Streaming vs. Downloading: The Supreme Court of Canada Ends Royalties for Music Downloads
Par Sarah D. Pinsonnault, avocate
On July 12th 2012, the Supreme Court of Canada (“SCC”) rendered five copyright-related cases, all of which involved collective licensing. In the case, the SCC had to decide whether streaming files from the Internet, triggered by individual users, constitutes communication “to the public” of the musical works contained therein by online music service providers.
To those of you who are unfamiliar with SOCAN, it is a collective society of composers, authors and publishers of music. It administers the right to perform in public and the right to communicate to the public by telecommunication the works covered by its members’ copyrights. It files proposed tariffs with the Copyright Board of Canada (“Board”), and collects royalties, as set by the Board, on behalf of its members.
In 1995, SOCAN filed proposed tariffs with respect to the performance and communication of musical works to the public over the Internet. The Board decided that the transmission of a musical work to an individual by an online music service provider, whether it be via downloads or streams, was considered a communication of that work to the public by telecommunication, thus falling within the meaning of s. 3(1)(f) of the Copyright Act:
« 3. (1) For the purposes of this Act, “copyright”, in relation to a work, means the sole right to produce or reproduce the work or any substantial part thereof in any material form whatever, to perform the work or any substantial part thereof in public or, if the work is unpublished, to publish the work or any substantial part thereof, and includes the sole right
(f) in the case of any literary, dramatic, musical or artistic work, to communicate the work to the public by telecommunication” (our underlining). »
Consequently, the Board established the tariffs it considered appropriate for the communication of musical works over the Internet between 1996 and 2006. The Federal Court of Appeal upheld this decision.
Rogers Communications, Shaw Cablesystems,
The appeal was allowed with respect to downloading music online, as this question was already answered by the SCC in the companion case Entertainment Software Assn. v. Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 34 (“ESA”). In ESA, the majority of the SCC determined that musical works are not “communicated” by telecommunication when they are downloaded. They ruled that downloading a musical work provides the user with a permanent copy of the file. This is identical to purchasing the same work in a store or having it shipped by mail. Therefore, a download is not a communication within the meaning of s. 3(1)(f), but a mere transmission
The question regarding downloads thus moot, the SCC moved onto that of streaming.
The Appellants asserted that their point-to-point transmission of a musical work via streaming cannot constitute a communication « to the public ». The SCC rejected this argument.
«  In addition, the appellants’ proposed rule that each transmission be analyzed in isolation because each is initiated at the request of individual members of the public would have the effect of excluding all interactive communications from the scope of the copyright holder’s exclusive rights to communicate to the public and to authorize such communications. A stream is often effectuated at the request of the recipient. On-demand television allows viewers to request and view the desired program at the time of their choosing. By definition, on-demand communications — relating to the so-called “pull” technologies — are initiated at the request of the user, independently of any other user, and each individual transmission happens in a point-to-point manner. None of these telecommunications would be considered as being made “to the public” simply because the actual transmission occurs at the initiative and discretion of the consumer to accept the invitation to the public to access the content.
 Nothing in the wording of s. 3(1)(f) of the Act implies such a limitation. A communication is not restricted to a purely non-interactive context. »
By focusing on each individual transmission, copyright protection would thus become dependant on the technicalities of how the alleged infringer chooses to obtain the copyrighted works. According to the SCC, this ultimately goes against the purpose of copyright protection, that being it serves to provide a communication right irrespective of the form of technology being used.
«  Ultimately, in determining the extent of copyright, regard must be had for the fact that “[t]he Copyright Act is usually presented as a balance between promoting the public interest in the encouragement and dissemination of works of the arts and intellect and obtaining a just reward for the creator” (Théberge v. Galerie d’Art du Petit Champlain inc., 2002 SCC 34 (CanLII), 2002 SCC 34,  2 S.C.R. 336, at para. 30). This balance is not appropriately struck where the existence of copyright protection depends merely on the business model that the alleged infringer chooses to adopt rather than the underlying communication activity. Whether a business chooses to convey copyright protected content in a traditional, “broadcasting” type fashion, or opts for newer approaches based on consumer choice and convenience, the end result is the same. The copyrighted work has been made available to an aggregation of individuals of the general public. »
As a result, the appeal was dismissed with respect to music streamed online.
To read the decision in its entirety, click here.