For Whom The Ringtone Tolls ' Federal Court Confirms No Repayment Owed To Telecommunications Companies By SOCAN For Communicating Downloadable Ringtones

• Published date: 13 April 2021
• Subject Matter: Corporate/Commercial Law, Intellectual Property, Media, Telecoms, IT, Entertainment, Corporate and Company Law, Mobile & Cable Communications, Copyright
• Law Firm: Bereskin & Parr LLP
• Author: Ms Tamara Winegust and Naomi Zener

The Blacksonian principle—that law is not made, but merely discovered—does not operate to nullify royalty payments for communicating downloadable musical works by telecommunication made under private settlement agreements between parties or Tariffs certified by the Canadian Copyright Board and not overturned by the courts. The Federal Court's recent decision in Rogers Communication Canada Inc v Society of Composers, Authors and Music Publishers of Canada, 2021 FC 207, ("Rogers 2021") confirmed that, notwithstanding the Supreme Court's 2012 decisions in Entertainment Software Association v Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 34 ("ESA") and Rogers Communications Inc v Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 35 ("Rogers"), telecommunications companies are not entitled to repayment from SOCAN (the Society of Composers, Authors, and Music Publishers, the Canadian performing rights organization that controls and administers performance and communication royalties related to the copyright in musical works) for royalties paid with respect to communicating downloadable mobile phone ringtones under certified tariffs and settlement agreements entered into prior to the Supreme Court's decision. Moreover, to the extent those telecommunications companies withheld payments to SOCAN owed under such certified tariffs or settlement agreements, they were now required to pay back the amount withheld, with interest.

The impact of technological change, developing consumer demands, res judicata, and the complexity of the Canadian royalty tariff certification regime, were all in play before Justice Lafrenière. The case revolved around the impact of the Supreme Court's decisions on copyright royalty payment requirements in ESA and Rogers. Those decisions settled arguments as to whether downloading copyrighted works via the Internet triggers royalty payments for both making a copy of that work as well as a "communication to the public by telecommunication". In short, it doesn't. The Supreme Court relied on the principle of "technological neutrality" to find that it is the end result that attracts the royalty payment. In the case of downloads, the Internet is simply a "technological taxi" that delivers the copy. There is no practical difference between this delivery method and buying a durable copy of the work in a store or receiving it through the mail. Nearly ten years later, the practical repercussions of these decisions are still winding their way through the court system.

Prior to ESA and Rogers, SOCAN and many rights holders took the position that sending a downloadable work over the Internet did implicate both a communication right and a reproduction right. As such, SOCAN applied to the Copyright Board to set royalty rates for communication of ringtones by telecommunication. Tariffs were...