CBC v. SODRAC (technological neutrality, nature of the reproduction right)

Edit: Decision released! (November 26)

In a 7-2 decision [1], the Court upheld the Copyright Board's decision to characterize broadcast-incidental copies as "reproductions" for the purposes of the Copyright Act, but overturned the Board's method of calculating fees payable for such activities. The majority found no reason to depart from long-standing caselaw on the character of ephemeral copies as reproductions for the purposes of the Act, and concluded that the separation of synchronization and broadcast‑incidental licences does not offend technological neutrality or impose new layers of protection or fees based solely on technological change. However, the majority concluded that the Board failed to consider the principles of technological neutrality and balance in valuing the ephemeral licence. The Court concluded that balance between user and right‑holder interests requires that the Board assess the respective contributions of the user and the copyright‑protected works to the value enjoyed by the user. Factors relevant to this balance include:

the risks taken by the user,
the extent of the investment made by the user in the new technology, and
the nature of the copyright protected work’s use in the new technology.

Justice Abella in a robust dissent, concurred with in this part by Justice Karakatsanis, would have said that broadcast incidental copies are not reproductions for the purposes of the Act since they are part of the activity of broadcasting, and to hold otherwise violates the principle of technological neutrality. Justice Abella argues that the principle of technological neutrality requires an inquiry into whether there is (a) media neutrality or (b) functional equivalence between the old and new technology in a way that maintains the balance between copyright owner and user interests. The dissent is deeply critical of the majority's approach to technological neutrality, suggesting that it ascribes value to copyright owners on the basis of user innovation that has nothing to do with the user's central activity or the rights of the copyright owner, and invites fragmentation and royalty stacking in a way that previous decisions of the Court had strived to avoid.

Background to the Decision

On March 16, 2015, CIPPIC was one of four interveners before the Supreme Court of Canada in CBC v SODRAC. This is an appeal of a Federal Court of Appeal decision which upheld the Copyright Board’s characterization of broadcast incidental copies as "reproductions" under the Copyright Act. At the heart of this appeal, the Court was asked to interpret the meaning of the word “reproduce” in section 3 of the Act.

In its oral submissions, CIPPIC supported a purposive and pragmatic interpretation of the reproduction right. CIPPIC offered a public-interest framework that would allow the Court to interpret the reproduction right in a manner that is consistent with Parliament’s intention.

CIPPIC argued that Parliament intended that the reproduction right should be applied in a purposively balanced, pragmatically efficient and a technologically neutral way. The Federal Court of Appeal's judgement noted that views of "technological neutrality" vary. The issue was then how to determine where to draw the line between a de minimus copy and a compensable reproduction. CIPPIC’s framework identified three criteria which must be met before a mere copy amounts to a "reproduction" for the purposes of the Copyright Act. The copy must be:

1. multiplied;

2. durable; and

3. material, in the sense that the copy "matters".

The first two criteria, multiplication and durability, have been established in previous caselaw (see Théberge v Galeria d’Art du Petit Champlain Inc, 2002 SCC 34; Bishop v Stevens, [1990] 2 SCR 467; and Entertainment Software Assn v Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 34). The final criterion originates from the language of the statute itself. CIPPIC contended that Parliament’s use of the words “in any material form” is not merely in reference to the substance in which a work is embodied, but rather, to engage the reproduction right, a copy of a work must matter; it must be "material".

CIPPIC suggested that there is ample authority to illustrate that Parliament granted an inherently limited right to reproduce. The word “reproduce” is ambiguous, as evidenced in the 4-3 split decision in Théberge on this exact issue. The modern approach to statutory interpretation requires that “reproduce” be interpreted purposively. Other indicia that the reproduction right is inherently limited include Parliament’s overall purpose, the statutory scheme as a whole and the practical implications of any less rigourous standard of "materiality".

While some might view the technical loopholes in the statute (i.e. sections 30.8 & 9) as evidence of Parliament’s intent to achieve balance, CIPPIC took issue with this loophole approach. In enacting these loopholes, Parliament might have simply wanted to achieve greater certainty with respect to these specific copies. In any case, it would be unrealistic to view these loopholes as a solution to technological innovation. Technological innovation is both inevitable and unpredictable. Rather than engage in a game of legislative catch-up in response to new technologies, Parliament has essentially "future-proofed" the Act through the principle of technological neutrality. Technological neutrality applied in this manner means that legislative amendments are not necessary every time unpredictable technological innovations enter the marketplace.

CIPPIC’s public-interest framework, if adopted by the Court, will allow it to apply the principle of technological neutrality in a manner that is consistent with the balance already embedded into section 3. The end result is that authors will continue to be compensated fairly for multiple, durable copies, and not every time a party realizes new value from technological innovation.