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SECTION II: ANALYSIS OF PROGRAM ACTIVITIES BY STRATEGIC OUTCOME

Analysis by Strategic Outcome

The Board's strategic outcome is to ensure fair decision-making to provide proper incentives for the creation and uses of copyrighted works. The achievement of this outcome relates to innovation, which is a main source of competitive advantage in all areas of economic endeavour.

The use and re-use of cultural and entertainment content (such as musical works) have become widespread with the advent of new media and on-line services, new playback and editing technologies and new uses in conventional media. These matters manifest themselves in some of society's most complex and contentious issues, including the downloading of musical content over the Internet using file-sharing software, the use of digital decoders to receive scrambled TV signals and the proliferation of duplication technologies, including computers, which have the capability to make digital copies of CDs and DVDs.

The Copyright Board of Canada recognizes the need to ensure an effective and efficient copyright regulatory regime in order to attain the maximum productivity in those sectors that create and use copyrighted works. Further, the performance of the Copyright Board will promote a fair and competitive marketplace as well as reasonable opportunities for Canadian firms to export copyright protected goods and services in the music, for content creation and programming areas, as well as for the downstream broadcasting, publishing and entertainment industries.

Financial Resources, 2007-2008

($ thousands)

Planned Spending	Total Authorities	Actual Spending
2,597	2,666	2,521

Human Resources, 2007-2008

($ thousands)

Planned	Actual	Difference
17	17	0

Program Activity

To contribute to this strategic outcome, the Board's unique program activity is to render decisions and issue licences. The expected result is to obtain fair and equitable tariffs and conditions. The decisions and licences described below set fair and equitable rates and conditions for the use of copyright protected works. Overall, the Board is responsible for tariffs that are estimated to be worth over $300 million annually. In fact, copyright tariffs underpin several industries which, according to a Conference Board of Canada study (Valuing Culture, Measuring and Understanding Canada's Creative Economy, Conference Board of Canada, August 2008), generated in 2007 an amount representing 7.4% of Canada's GDP when taking into account the direct, indirect and induced contribution. They also contributed 1.1 million jobs to the economy. The stakes are thus considerable both for copyright holders and for users of copyright.

In 2007-2008, the Board held six hearings and issued nine decisions and 21 non-exclusive licences. In addition, important decisions were issued by the Federal Court of Appeal. What follows is a brief summary of these activities listed on the basis of the various legal regimes which apply to each category. For further detail, please refer to the Board's 2007-2008 Annual Report that can be found at www.cb-cda.gc.ca.

1. Public Performance of Music
   
   During the fiscal year, the Board held four hearings on the following tariffs:
   
   
   • Tariff 22 (Internet) of the Society of Composers, Authors and Music Publishers of Canada (SOCAN) for the years 1996-2006 (April and May 2007).
     
   • Re-determination of Tariffs 1.A (Commercial Radio Stations) of SOCAN and the Neighbouring Rights Collective of Canada (NRCC) for the years 2003 to 2007, further to an order of the Federal Court of Appeal (June 2007).
     
   • Satellite Radio Services: SOCAN Tariff 25 for the years 2005-2007 and NRCC Tariff 4 for the years 2007-2010 [jointly with the proposed tariff of CMRRA/SODRAC Inc. for reproduction rights for the years 2006-2009] (November and December 2007).
     
   • SOCAN Tariff 16 (Background Music Suppliers) for the years 2007 and 2008 (January 2008).

   The Board issued four decisions certifying the following tariffs:

   • SOCAN Tariff 22.A (Internet - Online Music Services) for the years1996-2006 (October 18, 2007).
     
   • SOCAN and NRCC Tariffs 1.A (Commercial Radio Stations) for the years 2003-2007 [re-determination further to an order of the Federal Court of Appeal] (February 22, 2008).
     
   • SOCAN Tariff 17 (Pay, Specialty and Other Television Services) for the years 2005-2008 (March 20, 2008).
     
   • Various other SOCAN Tariffs (March 20, 2008).
     
2. Private Copying

   On June 5, 2007, the Board held a hearing on preliminary motions concerning the tariff proposed for the years 2008-2009. Also, the following four decisions were issued:

   • Certification of the tariff for the years 2005-2007 (May 11, 2007).
     
   • Two decisions on preliminary motions concerning the 2008-2009 tariff proposal (July 19, 2007 and March 27, 2008).
     
   • Establishment of an interim tariff for the year 2008 (December 18, 2007).
     
3. Collective Administration (General Regime)
   

   During the months of June and October 2007, the Board held a hearing on the tariff proposed by Access Copyright, The Canadian Copyright Licensing Agency for the reprographic reproduction (photocopy) of works in its repertoire by primary and secondary schools for the years 2005-2009. The decision is under advisement.

   As mentioned earlier under section I, in November and December 2007, the Board held a joint hearing on three tariff proposals for subscription radio services. One of the proposals was filed by CMRRA/SODRAC Inc. (CSI) for the reproduction of musical works for the years 2006-2009; the two others are for performing rights. The decision is under advisement.

   On February 29, 2008, the Board rendered a decision on an application filed jointly by the Audio-Video Licensing Agency (AVLA) and the Société de gestion collective des droits des producteurs de phonogrammes et de vidéogrammes du Québec (SOPROQ) for an interim tariff for the reproduction of sound recordings by commercial radio stations for the years 2008-2011.

4. Unlocatable Copyright Owners
   

   In 2007-2008, 30 applications were filed with the Board for the use of published works for which rights holders could not be found; 21 non-exclusive licences were issued for the use of such works and one application was dismissed on the basis that the applicant did not use a substantial part of the work; a licence was therefore not required.

   On August 22, 2007, the Board adopted a policy on the issuance of licences for architectural plans held in municipal archives. Since 2002, the Board had issued a number of licences authorizing the reproduction of architectural plans that are held in the municipal archives so as to afford applicants access to plans to which they are legally entitled, until the Board finalized its policy on this issue. In August 2007, the Board concluded that, most of the time, those who wished to obtain copies of plans did not require a licence, for two reasons.

   First, in most cases, the contemplated uses either constitute fair dealing for the purpose of research or would be covered by an implied licence.

   Second, subsection 32.1(1) of the Copyright Act provides that a municipality that supplies copies of plans pursuant to an access to information request does not violate copyright. Most Canadian municipalities are subject to access to information legislation.

   The Board intends to deal with future applications concerning architectural plans with a view to implementing this policy. As required by law, each application will be dealt with separately, so as to ensure that a licence is issued should exceptional circumstances so require.

5. Agreements Filed with the Board
   

   In 2007-2008, 275 agreements were filed with the Board as per section 70.5 of the Act.

   Access Copyright, The Canadian Copyright Licensing Agency, which licenses reproduction rights such as digital licensing and photocopy, on behalf of writers, publishers and other creators, filed 147 agreements granting, amongst others, educational institutions, language schools, non-profit associations and copy shops a licence to photocopy works in its repertoire.

   The Société québécoise de gestion collective des droits de reproduction (COPIBEC) filed 95 agreements. COPIBEC is the collective society which authorizes in Quebec the reproduction of works from Quebec, Canadian (through a bilateral agreement with Access Copyright) and foreign rights holders. The agreements filed in 2007-2008 were concluded, amongst others, with educational institutions, school boards, municipalities and municipal libraries.

   The Audio-Video Licensing Agency (AVLA), which is a copyright collective that administers the copyright in master and music video recordings, filed 32 agreements.

   Finally, the Canadian Broadcasters Rights Agency (CBRA) filed an agreement it entered into with the Treasury Board of Canada for media monitoring. CBRA represents various Canadian private broadcasters who create and own radio and television news and current affairs programs and communication signals.

6. Court Decisions
   

   Re: SOCAN Tariff 24 (Ringtones) - 2003-2005

   On August 18, 2006, the Board certified for the first time SOCAN Tariff 24, targeting the communication to the public by telecommunication of ringtones to cellular phone owners. The following month, the Canadian Wireless Telecommunications Association, Bell Mobility Inc. and TELUS Communications sought judicial review of that decision.

   The challenge was based on two principal grounds. First, transmitting a ringtone to a cellular phone does not constitute a "communication". Second, the transmission is not a communication "to the public". On January 9, 2008, the Federal Court of Appeal unanimously dismissed the application.

   Relying on Society of Composers, Authors and Music Publishers of Canada v. Canadian Assn. of Internet Providers, [2004] 2 S.C.R. 427 (hereafter "SOCAN"), the Court first concluded that the standard of review applicable to the decision, which turned on the interpretation of paragraph 3(1)(f) of the Copyright Act, was correctness. Then, before proceeding with its analysis of the applicants' main arguments, the Court addressed two other questions.

   The applicants were already licensed to reproduce the musical works used in ringtones. They argued that enforcement of copyright should not be split between different collectives so as to collect a second time for a use which is already being compensated. In response, the Court reiterated that the right to reproduce and the right to communicate are separate rights. Consequently, if the transmission of a musical ringtone constitutes a communication to the public by telecommunication, Tariff 24 is valid since it compensates a right that is not covered by the reproduction rights agreements.

   The Court then noted that the parties referred to foreign copyright regimes. The Court simply responded that none of these regimes involves legislation that is sufficiently like the Canadian Act to assist in resolving the legal issues to be addressed.

   A customer is unable to play or hear a ringtone at the time that a carrier sends it. The applicants contended that a communication occurs only if a transmission is intended to be heard or perceived by the recipient simultaneously with or immediately upon the transmission. The Court was of the opposite view. It concluded that the transmission of a ringtone is a communication, whether the owner of the cellular phone accesses it immediately or at some later time. It is the receipt of the transmission that completes the communication. The Court added that its conclusion accorded with the SOCAN decision and that it did not see any relevant distinction between the transmissions in issue in that case and the transmission of a ringtone.

   The Court also found that the decisions on which the applicants relied to conclude that the transmission of a ringtone does not constitute a communication were of no assistance. To the contrary, these cases cast no doubt on the conclusion that the transmissions in issue in this case were communications.

   Alternatively, the applicants argued that a series of identical communications could not be a communication to the public if each communication was initiated by the recipient's request. Since cellular phone subscribers receive one by one the ringtones they purchase, each transmission would therefore be a private communication. The Court dismissed this argument. All of the customers of a ringtone supplier are a group that is sufficiently large and diverse that it may fairly be characterized as "the public". Furthermore, a series of transmissions of the same musical work to numerous different recipients is a communication to the public if the recipients comprise the public, or a significant segment of the public. Finally, no earlier decision, including those of the Federal Court of Appeal and the Supreme Court of Canada in CCH Canadian Ltd. v. Law Society of Upper Canada, [2004] 1 S.C.R. 339; [2002] 4 F.C. 213, were intended to be a comprehensive description of the meaning of "communication to the public".

   The Court also found that Canadian Cable Television Assn. v. Canada (Copyright Board) (F.C.A.), [1993] 2 F.C. 138 was not relevant. In that case, the question was whether a performance was in public, not whether a communication had been made to the public. In any event, the fact that ringtones are offered to a significant segment of the public supplied the requisite degree of "openness" to ensure the public nature of the communication.

   The Court's reasons concluded by stating that the Board's interpretation accorded with common sense. If a wireless carrier were to transmit a particular ringtone simultaneously to all customers who have requested it, that transmission would be a communication to the public. It would be illogical to reach a different result simply because the transmissions are done one by one, and thus at different times.

   Re: Private Copying 2008-2009

   On August 16, 2007, Apple Canada Inc. and several other companies applied to the Federal Court of Appeal for judicial review of the Board's decision of July 19, 2007 that digital audio recorders could, under certain conditions, attract private copying royalties. On October 26, 2007 the Canadian Recording Industry Association (CRIA) was granted leave to intervene in the matter.

   The application relied on three grounds. First, the Federal Court of Appeal had previously ruled that a digital audio recorder is not an "audio recording medium". Second, even if the question remained unanswered, the Canadian Private Copying Collective (CPCC) was estopped from arguing the issue. Third, since a digital audio recorder is not an "audio support medium" in any event, it is not subject to the private copy regime.

   On January 10, 2008, in remarkably concise reasons, the Court allowed the applications. The sole ground given is a statement that Canadian Private Copying Collective v. Canadian Storage Media Alliance (C.A.), [2005] 2 F.C.R. 654 is authority for the proposition that digital audio recorders cannot attract private copying royalties.

   Accordingly, the Court quashed the decision of July 19, 2007 and referred the applicants' motions back to the Board for reconsideration and disposition in accordance with the Court's reasons. On March 27, 2008, the Board complied with the Court's decision.

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