SOCAN sued for $15 million refund of ringtones payments

Yesterday, Rogers, Telus, Bell and Quebecor commenced an action against the copyright collective SOCAN. In the Federal Court suit Canada’s leading carriers are claiming a refund of all royalties paid to SOCAN under its Tariff 24 (Ringtone) tariffs since November, 2006.

SOCAN’s Ringtone tariffs claimed royalties from mobile service providers which sold ringtones (short excerpts of music works used to indicate incoming calls or text messages on mobile devices) and transmitted them to customers. SOCAN claimed those downloads were communications to the public by telecommunication under Section 3(1)(f) of the Copyright Act,  a right administered by SOCAN. The telcos opposed the tariffs claiming, among other things, that a download of a music work including a ringtone was not covered by the right to communicate a work to the public. The Copyright Board disagreed and certified the tariff. In a judicial review from the decision the Federal Court of Appeal agreed with SOCAN that the communication right extended to transmissions of downloads to customers. The telcos unsuccessfully applied for leave to appeal the decision to the Supreme Court.

The question of whether a transmission of a download of a musical work arose again in SOCAN’s Tariff 22 proceeding. In that proceeding the Copyright Board again held that the download of musical works including musical works in video games was a communication to the public by telecommunication. In two separate judicial reviews, the Federal Court of Appeal again dismissed the arguments to the contrary. This time, however, the Supreme Court granted leave to appeal on the question. The appeal was heard last December as part of the Supreme Court copyright pentalogy. In July the Supreme Court, in the ESA v SOCAN case, reversed the decision of the Copyright Board holding that the communication to the public right is a right of public performance and that a download of a musical work is covered by the right of reproduction and not the communication right. In so ruling, the Supreme Court declined to follow the decisions of the Federal Court of Appeal including the decision that addressed SOCAN’s Ringtone tariffs, effectively overruling it.

The telcos are now seeking repayment of the royalties, allegedly 15 million dollars, paid under the SOCAN Ringtone tariffs. They claim the Copyright Board did not have the jurisdiction to certify the tariff’s and that they have a right to be repaid under the doctrines of restitution, unjust enrichment and the equitable doctrine of a constructive trust.

A copy of the Statement of Claim is set out below.

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