The CRIA members were hit with the lawsuit [PDF] in October 2008, after artists decided to turn to the courts following decades of frustration with the rampant infringement (I am adviser to the Canadian Internet Policy and Public Interest Clinic, which is co-counsel, but have had no involvement in the case). The claims arise from a longstanding practice of the recording industry in Canada, described in the lawsuit as “exploit now, pay later if at all.” It involves the use of works that are often included in compilation CDs (ie. the top dance tracks of 2009) or live recordings. The record labels create, press, distribute, and sell the CDs, but do not obtain the necessary copyright licences.
Instead, the names of the songs on the CDs are placed on a “pending list”, which signifies that approval and payment is pending. The pending list dates back to the late 1980s, when Canada changed its copyright law by replacing a compulsory licence with the need for specific authorization for each use. It is perhaps better characterized as a copyright infringement admission list, however, since for each use of the work, the record label openly admits that it has not obtained copyright permission and not paid any royalty or fee.
As I noted in the piece, the record labels had little motivation to pay up as David Basskin noted in his affidavit that the labels “devoted insufficient resources to identifying and paying the owners of musical works on the Pending Lists”. The class action lawsuit clearly got their attention. As part of the settlement, the labels will pay approximately $45 million to settle the copyright infringement claims. It also establishes a new mechanism to help ensure that artists are paid more promptly. The press release indicates that everyone is pleased with the settlement, though it is striking that it took a class action settlement to get the record labels to address their own ongoing copyright infringing practices in paying artists for the use of their works.