Copyright Law Developments Of 2015

Last year saw a flurry of copyright activity, both from the Canadian courts, and legislators, ranging from the Supreme Court's update on the principle of technological neutrality to the Trans-Pacific Partnership (TPP). Below are our top picks for 2015's most significant copyright developments.

1. Technological Neutrality

   Canadian Broadcasting Corp v SODRAC 2003 Inc, 2015 SCC 57

   In 2015, the Supreme Court of Canada sent a clear message that technological neutrality is an important principle that guides interpretation of the Copyright Act ("the Act"). However, it does not override statutory language and purposive construction.

   At issue was whether "broadcast-incidental" copies, (i.e. temporary copies that current broadcasting technology renders necessary in the course of broadcasting a work to the public) engage the reproduction right under the Act. If so, how are these copies to be valued in determining compensation to copyright holders? In 2012, the Copyright Board held that CBC had to pay additional royalties for broadcast-incidental copies to the copyright collective, SODRAC, because these copies engaged the reproduction right under s. 3(1)(d) of the Act. The Federal Court of Appeal upheld that broadcast incidental copies required a separate licence. The CBC appealed to the Supreme Court of Canada.

   The majority of the Supreme Court affirmed that broadcast-incidental copies engaged a reproduction right and were subject to a separate royalty payment from that covering the broadcast activity itself. After extensive discussion about the nature and importance of technological neutrality, the majority also held that the Board did not adequately consider this principle or copyright balance in setting the value of CBC's broadcast-incidental copies. It remitted the matter of valuation back to the Board.

   In her strong dissent, Justice Abella adopted a functional approach to technological neutrality, finding that, broadcast-incidental copies do not engage the reproduction right. She criticized the majority's "literal" approach to statutory interpretation, noting that it effectively penalized broadcasters for implementing technological advancements by creating extra liability under the Act for incidental activities. Although both the majority and minority stressed the importance of technological neutrality, the majority's decision has significant implications for valuation of licensing and royalty fees.

2. Procedural Fairness

   Netflix Inc v SOCAN, 2015 FCA 289

   In 2014, Netflix applied to the Federal Court of Appeal for Judicial Review of the decision issued by the Copyright Board concerning proposed SOCAN royalties. In 2012, the Board certified a tariff agreement for audiovisual webcasts for the period 2007-2013. The original proposed tariff did not charge users fees for free trials. Subsequently, the Copyright Board invited parties to make submissions in respect of a revised agreement, not published in the Canada Gazette, that included provisions for extra royalties during free trials. As Netflix was not a party to the original proceeding, it was not invited to participate in the process. Since it offered free trials, however, Netflix made submissions to the Board in opposition, arguing that its free trials were fair dealings and should not be subject to royalties. Ultimately, the Board certified the settlement tariff with payments for free trials without regard to Netflix's submissions.

   On Appeal, Netflix alleged the Board violated its right to procedural fairness by refusing to allow Netflix to provide information with respect to fair dealing and technological neutrality. The Court of Appeal reviewed the Board's certification process on the standard of correctness. It set aside the Board's decision insofar as it pertained to royalties for free trials and returned it for redetermination. The Court concluded that Netflix should be given the opportunity to put its case forward since the tariff provision opposed by Netflix arose during the settlement discussions and was not in the original proposed tariff.

3. Copyright and the Internet

   Red Label Vacations Inc (redtag.ca) v 411 Travel Buys Limited (411travelbuys.ca), 2015 FC 19, affirmed 2015 FCA 29

   The plaintiff, Red Label Vacations, operated a travel...