Last week's Supreme Court online music tariff decision — popularly known as the Tariff 22 case — culminated nine years of legal wrangling as the Society of Composers, Authors and Publishers of Music in Canada (SOCAN), a leading Canadian music collective, failed in its attempt to pin a new royalty for downloaded music on Canada's Internet service providers. The result marks another defeat for the music industry that lost not only this case, but also received signals from Canada's highest court that its file sharing litigation may be in for further trouble.
The Tariff 22 case dates back to 1995 when SOCAN first applied for a new tariff for downloading online music. After four years of hearings, the Copyright Board of Canada issued a decision in 1999 that largely absolved Internet Service providers from collecting such a tariff.
The case was appealed to the Federal Court of Canada, which ruled in 2002 that ISPs might be required to pay some royalties due to the common practice of caching content on their servers to speed up its delivery. The court reasoned potential liability was appropriate since caching was not strictly necessary to deliver content and thus it fell outside of the intermediary exemption found in the Copyright Act.
The Supreme Court last week overturned the Federal Court decision, thus protecting the ability to deploy innovative technologies such as caching that improve the efficiency of the Internet. Canadian ISPs breathed a sigh of relief as the court concluded that "when massive amounts of non-copyrighted material are accessible to the end user, it is not possible to impute to the Internet service provider, based solely on the provision of Internet facilities, an authority to download copyrighted material as opposed to non-copyrighted material."
Moreover, the court again emphasized the importance of a copyright balance between creators and users, noting that the protection of intermediaries such as ISPs is not a loophole in the Copyright Act, but rather a critical part of the balance.
Although some in the music industry professed to be pleased by the outcome, the decision marked a strong rejection of SOCAN's ISP liability legal theory leaving the copyright collective with a proposed tariff that few deep-pocketed ISPs will be required to pay.
In fact, the decision may be even more damaging to the industry than it appears at first blush. While the case does not directly address peer-to-peer file sharing, many copyright experts openly speculated about whether the Supreme Court might use the Tariff 22 case to provide some insight into its views on peer-to-peer file sharing in light of last March's federal court decision denying the Canadian Recording Industry Association's request for information on the identities of 29 computer users who allegedly uploaded music files onto peer-to-peer networks.
Given that the case is currently on appeal, the court not surprisingly did not specifically refer to the decision. It did, however, address two issues that would appear to support Judge Konrad von Finckenstein's findings on the scope of Canadian copyright law and on the importance of factoring privacy rights into the copyright analysis.
With respect to the scope of Canadian copyright law, Judge von Finckenstein and the Supreme Court both emphasized that copyright analysis should be confined to Canadian copyright law as it currently is, not as it might be should we follow the lead of the United States in amending our law.
In the file sharing suit, Judge von Finckenstein referenced the controversial World Intellectual Property Organization (WIPO) Internet treaties and concluded that the "treaty has not yet been implemented in Canada and therefore does not form part of Canadian copyright law." Similarly, the Supreme Court of Canada noted that Canada's response to the WIPO treaties "remains to be seen" and that in the meantime Canadian courts must transpose the existing Copyright Act to emerging technologies.
More importantly, both Judge von Finckenstein and Justice Louis LeBel of the Supreme Court articulated the view that respect for privacy rights must be factored into copyright analysis.
In the file sharing decision, Judge von Finckenstein ruled that Canadian law requires a balancing between privacy rights on one side and the rights of others as well as the public interest on the other, concluding that the privacy interests of the alleged file sharers outweighed the public interest concerns favouring the disclosure of their identities.
In its pending appeal, the recording industry has argued that Judge von Finckenstein "erred in stating that it was common ground that ISP subscriber defendants had an expectation that their identity would be kept private and confidential" and further erred that "the privacy concerns of the ISP subscriber defendants outweighed the public interest in disclosure."
That argument may be in for a rough ride in light of a concurring opinion buried at the end of the Tariff 22 decision in which Justice LeBel left little doubt about where he stands on the importance of protecting privacy rights in copyright cases. Justice LeBel argued that the Court should adopt an interpretation of the reach of the Copyright Act that "respects end users' privacy interests" and it "should eschew an interpretation that would encourage the monitoring or collection of personal data gleaned from Internet-related activity within the home."
In fact, Justice LeBel was particularly concerned with approaches that examine the Internet retrieval practices of end users, suggesting that this encourages the monitoring of an individual's surfing and downloading habits. He concluded by noting that the "privacy interests of individuals will be directly implicated where owners of copyrighted works or their collective societies attempt to retrieve data from Internet Service providers about an end user's downloading of copyrighted works. We should therefore be chary of adopting a test that may encourage such monitoring."
Although it is unclear whether the remainder of the court shares Justice LeBel's privacy concerns, there is no doubt that he has succeeded in sending a clear warning against any copyright enforcement strategies that fail to adequately account for user privacy. While it took nine years to obtain a final resolution of the legal issues associated with the online music tariff, the case will not take that long to resonate in other courts. With the file sharing appeal around the corner, the Supreme Court's decision will not be music to the recording industry's ears.