Supreme Court Of Canada To Hear Another Technological Neutrality Case

The Supreme Court of Canada announced today that it has granted leave to appeal to the Canadian Broadcasting Corporation et al. from the Federal Court of Appeal (FCA) in the copyright case Canadian Broadcasting Corporation v. SODRAC, 2014 FCA 84, in which the FCA upheld SODRAC's royalty on ephemeral copies made during the course of production. The dispute centres on whether the CBC and other broadcasters must pay a royalty for ephemeral recordings made solely for the facilitating the broadcast of the performance or whether the concept of technological neutrality allows them to do so without triggering the royalty.

The Society for Reproduction Rights of Authors, Composers and Publishers in Canada (SODRAC) is a collective society responsible for the administration of reproduction rights in Canada. They applied to the Canadian Copyright Board to set the terms of reproduction licenses for 2008-2012 after negotiations with the two broadcasters disintegrated. The CBC and Astral had both wanted a through-to-the-viewer license which authorizes all necessary rights for downstream users, within the temporal or geographical limits of the license. SODRAC had applied for a different type of license, one where "each link in the distribution chain must acquire (and pay for) the rights to make the copies required for commercial purposes". The difference in strategies revolved around broadcasting technology which requires producers to make multiple copies of the work in order to broadcast or exhibit it. These copies are known as ephemeral or incidental copies and whether they attract the royalty is central to the dispute.

The Board had found that they could not impose liability if the Copyright Act did not or remove liability if the Copyright Act imposed it. Consequently, they could not remove the royalty for reproduction and they could not force SODRAC to change its royalty model, provided it was in accordance with the Act. The Board also found that the new technologies that required reproducing copies of the work also added value to each business and that some of the value "should be reflected in the remuneration paid for additional copies".

On appeal, the CBC argued that the principle of technological neutrality, as articulated by the Supreme Court in Entertainment Software Association v. Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 34, (reported here) prevents SODRAC from claiming royalties on copies made purely to meet the...