Canada's Highest Court Shakes Up Copyright Laws

Music rights owners lose big in a bid to collect tariffs for compositions used in downloadable video games.
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The Supreme Court of Canada came out with five big copyright decisions Thursday that will shake up licensing of entertainment content in the country. The rulings deal with music used on TV shows and in movies, music and video games downloaded from the internet, music previewed via services like Apple's iTunes and excerpts of books and magazines for educational use.

But perhaps the decision with the biggest impact deals with whether video games offered for sale online are "communicated" to users. That's important because the Society of Composers, Authors and Music Publishers of Canada applied for a tariff to collect a fee for in-game music from its distributors.

However, the Supreme Court has held in a narrow 5-4 decision that internet downloads are not "communications" and that for all intent and purposes downloads of video games are identical to copies purchased in stores or shipped by mail. Because the games are seen as "reproductions," that means publishers of works that have embodied music have to pay royalties for that use but that online distributors don't. (Those who stream music still do, per another decision Thursday.)

One law firm in Canada says the video game download decision "flies in the face of the way media industries and the Copyright Board have been carrying on business for over a decade" and "will have a significant impact on licensing practices, tariff royalties and other internet uses of content."

The judges also were busy on other subjects.

The Supreme Court is giving relief to film companies and TV broadcasters over the use of sound recordings in audiovisual works. Against the objection of copyright collective Re:Sound, the judges have refused to certify tariffs on the use of music for shows and films.

The decision, according to a statement from Re:Sound means that "unlike songwriters and publishers, artists (including featured performers, background players, session musicians, etc.) and record companies will continue to be shut out from compensation even though their recordings contribute significantly to the success of a film or TV program."

In other rulings, the Supreme Court also found that free samples of music offered online don't violate the Copyright Act because they constitute "fair dealing" for the purpose of research. The decision means, among other things, that Apple's iTunes will no longer have to pay royalties or tariffs for letting consumers preview 30 seconds of a song before purchase. Similarly, Canada's high court overturned a lower court decision by saying that teachers copying sections of textbooks for students also constituted "fair dealing" and no tariffs were owed.

Taken as a whole, the decisions mark a sweeping reform of copyright law in Canada and a severe limitation on what copyright collection societies can demand distributors of content must pay.

E-mail: eriq.gardner@thr.com

Twitter: @eriqgardner

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