ASCAP case highlights differences in Canadian and US copyright law (updated)

October 4th, 2011 by Barry Sookman Leave a reply »

The influential US Court of Appeals for the Second Circuit ruled in ASCAP v RealNetworks that a download of a musical work is not a public performance under the US Copyright Act. According to the Court downloads of musical works are not musical performances that are contemporaneously perceived by the listener.

“They are simply transfers of electronic files containing digital copies from an on-line server to a local hard drive. The downloaded songs are not performed in any perceptible manner during the transfers; the user must take some further action to play the songs after they are downloaded. Because the electronic download itself involves no recitation, rendering, or playing of the musical work encoded in the digital transmission, we hold that such a download is not a performance of that work, as defined by § 101.”

Leave to appeal to the United States Supreme Court from this opinion was dismissed yesterday. 

The ASCAP decision highlights a significant difference between US and Canadian law on whether copyright owners of the performance rights in musical works are entitled to royalties when a copy of a music file is transmitted over a network. In the US, this form of distribution is not a public performance. Royalties must be paid to the holders of the reproduction right, but no additional royalties have to be paid for the right to transmit copies.

However, three decisions of the Canadian Federal Court of Appeal, Tariff 24 Ringtones, SOCAN v Bell Canada and ESA v CSI, came to a different conclusion. In the Tariff 24 Ringtones case, the Federal Court of Appeal ruled that a transmission of a short musical file to a customer as part of a purchase transaction is a communication of the musical work to the public by telecommunication. The Court rejected arguments that the communication right is limited to the transmission of performances not downloads. It also ruled that individual transmissions are also communications that are to the “public”. The Court reached the same conclusion in the SOCAN v Bell and ESA v CSI cases, although giving different reasons and mainly restricting it’s opinion to whether the transmissions are to the public.

This divergence in the law has important consequences. Traditionally, creative products were bought and delivered on a tangible medium such as a CD or DVD. This expanded to mail orders and rentals of creative products on such carriers. In these types of transactions, no one contended that the transfer or delivery implicated any performance right, merely because the item could be played in private once received. However, with the expansion of ecommerce, creative products are increasingly being purchased and downloaded online such as music files that are downloaded from iTunes. Many other creative products including ebooks and games that are distributed electronically also include music.

Under the law as it has been interpreted by our courts, the technological difference in the method of delivery leads to a payment under the communication right although there is nothing resembling any public performance of the downloaded song. Under yesterday’s ruling, the technological neutrality of the US Copyright Act was preserved so that there is no legal difference in the method used to deliver the work as far as performance royalties are concerned. Under both acts, the transmission of streams would be subject to a performance royalty.

The Supreme Court of Canada granted leave to appeal in both the SOCAN v Bell and ESA v CSI cases. These cases are scheduled to be heard in December this year along with three other cases in a Supreme Court of Canada copyright tariff pentalogy.

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