Copyright Board refuses CAB request to rescind CSI tariff

The Copyright Board released a decision earlier today dismissing the application of the Canadian Association of Broadcasters (CAB) for a decision reducing the royalties paid by commercial radio stations to CSI, AVLA/SOPROQ and ArtistI by 90 per cent, from November 7, 2012 until the Board renders a decision on the merits in the commercial radio tariff proceeding.

The CAB contended there is no longer a legal basis for a tariff targeting the reproduction of a sound recording, or a performer’s performance or work that is embodied in a sound recording, by commercial radio stations as a result of the recent Bill C-11 amendments to the Copyright Act and the fair dealing decision of the Supreme Court in SOCAN v. Bell Canada. The CAB also asked the Board to issue a decision rescinding the CSI tariff.

CAB’s arguments were summrized by the Board as follows:

The application is based on recently enacted sections 29.24 and 30.71 of the Act, section 30.9 as amended, and SOCAN v. Bell Canada. Essentially, CAB submits that their combined effect is such that stations are no longer making reproductions protected by copyright since listening to and creating copies for evaluation purposes is fair dealing for the purpose of research under section 29 of the Act; the stations’ programming process, from putting together the content to broadcasting, is a single technological process within the meaning of section 30.71 of the Act; backup copies are permitted under section 29.24 of the Act; and all of the stations are in compliance with section 30.9 of the Act. CAB further submits that CSI confirmed each of these arguments in the lobbying it did during the examination of Bill C-11.

The Copyright Board refused the CAB’s request to rescind the CSI tariff. The Board acknowledged that it will need to decide how the amendments to the Copyright Act and the SOCAN v Bell case will affect the applicable tariffs. But, the Board dismissed CAB’s motion for immediate interim relief without even hearing from any responding parties, finding the application “untenable” and stating the following:

First, it is incorrect to claim that because of the rules invoked by CAB, there is no legal basis for any tariff dealing with the reproduction of a sound recording, or a performer’s performance or work that is embodied in a sound recording, by commercial radio stations. In this respect, the application is, on its face, untenable. Assuming that every station could currently rely on all of the provisions on which the application is based, it would be impossible for them to prove now that they would comply with them in the future. Even admitting, for the moment, that all of these “users’ rights” are to be interpreted broadly, each station must nevertheless show whether it may avail itself of them in respect of each protected use the station makes. Some might not be able to show that they comply with all of the conditions of all the exceptions for all of the reproductions they make. Two examples will suffice to illustrate what we mean.

At first glance, it would appear that a station may not avail itself of sections 29.24 and 30.9 of the Act if the source copy is an infringing copy. A record label needs the permission of the copyright owner of a musical work to reproduce the work onto a recording. As a rule, that permission is sought before the recording is made in the case of first recordings. However, in the case of subsequent recordings (or “covers”), a label often does not seek that permission until after having launched the second recording; sometimes, the licence is never issued. Consequently, the copy of the work the label supplies to the radio station is an infringing copy. To what extent would this prevent a station that copies a new recording from availing itself of the exception? On a related note, the Board found that the copy that a digital music distribution service (MDS) delivers is clearly authorized as far as the sound recording is concerned, but is not authorized in respect of the musical work: Commercial Radio Tariff (SOCAN: 2008-2010; Re:Sound: 2008-2011; CSI: 2008-2012; AVLA/SOPROQ: 2008-2011; ArtistI: 2009-2011).4 May a station avail itself of section 30.9 of the Act if such is the case?

CAB further submits that Bell is directly applicable to a station’s evaluation and selection copies. There are similarities between listening to a preview before purchasing a work and listening to a complete work to decide whether or not to broadcast it. There are also some significant differences, to which the Supreme Court itself alluded, for example, full reproduction vs. short excerpts, identical quality vs. low quality, and streaming vs. downloading.5 A significant amount of additional evidence will no doubt be required, since the question of what is or is not fair is above all a matter of context.

Clearly, the question of the impact of the rules invoked by CAB on the scope (and hence, the value) of the protected reproduction activities in which stations may engage will have to be resolved. This may result in the certification of reduced royalties or of a scaled tariff allowing a station to pay more or less (or nothing) depending on the degree of its compliance with the conditions provided for under these rules. Once the question has been refocused in this way, however, it no longer seems to allow for the categorical answer that CAB is seeking. Simply abolishing the tariffs, were it possible or even desirable, could have damaging consequences for those stations which would be unable to legitimize all the copies they make based on CAB’s arguments.

Second, it is preferable to dispose of the application on the merits at the same time as for all of the proposed tariffs for commercial radio, rather than as part of a process dealing solely with CAB’s claims. Splitting up the examination of the substantive issues raised in a single matter should be the exception. Singling out for treatment an issue at a preliminary stage is justified, for example, if it can be conveniently isolated, if the evidence required to decide it does not overlap with the rest of the evidence on the merits, and if deciding it first may avoid the need to engage other controversial issues. Such is not the case here. Deciding the application requires substantial evidence that relates to the very core of the debate, namely the scope (and hence, the value) of the protected reproduction activities that stations engage in.

Third, CAB’s arguments cannot justify a royalty reduction for an entire industry unless all the stations operate in the same way. Quite apart from what the Board already knows in this respect, the wording of the application confirms  that such is not the case. It is stated that evaluation copies are sometimes of lower quality than a CD, sometimes not [para. 27]; that sometimes an MDS file is used for evaluation, sometimes not [para. 28b]; and that programming directors are not always able to perform their evaluation on the basis of an MDS file or a CD [para. 28d]. Given the apparent lack of consistent practices, a sampling or survey will be required to establish the variations. Once again, this is evidence that is usually assessed as part of the examination on the merits.

Fourth, CAB has always insisted that the proceedings in which it participates be split up as little as possible.

CAB’s application to vary the tariff in respect of CSI for the period from November 7 to December 31, 2012 was also denied for the following reasons:

First, the evidentiary problems and legal issues we alluded to regarding the application on the merits are as much at issue in the application for an interim decision. We do not see how we could deal with the interim application more expeditiously or with less evidence than for the decision on the merits. It is more convenient and fair to leave the parties in their current state and to deal with all of these questions when the application is considered on the merits, so long as this is done without delay.

Second, the point of view that CSI may have expressed before a parliamentary committee is not evidence in this case to substantiate CAB’s claims. A person’s argument may set out what that person thinks but it does not constitute a basis for statutory interpretation.

Third, the balance of convenience, to the extent that it is relevant in this instance, favours the collective societies. A station is more likely to go out of business than a collective. A station could easily and quickly deduct any overpayment from future royalties. If overpayments are considerable, the Board could easily provide in the tariff that the collectives are to pay them back immediately. The inverse is not necessarily possible.


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