Day 68: Good Tunes by Tom Small (CC BY-SA 2.0)

Day 68: Good Tunes by Tom Small (CC BY-SA 2.0)


Federal Court of Appeal Deals Music Labels Major Defeat By Upholding Tariff 8 Internet Streaming Decision

Few Copyright Board of Canada decisions have elicited as much anger from the music industry as the 2014 Tariff 8 decision. The decision relied on commercial radio rates as the barometer, which seemed appropriate given the similarities between Internet streaming services that do not allow users to select specific songs and commercial radio stations that play a regular music rotation. Music Canada and its allies disagreed, launching a major campaign against the decision, which it said resulted in 10 percent of nothing. The industry was particularly upset that the rates were lower than the U.S. (due to international copyright obligations, the Canadian repertoire during the period of the tariff was about the half as large as the U.S. one). The industry appealed the decision with considerable fanfare, promoting the many groups that joined in the action.

In the period since the decision, there have been some notable developments. Internet streaming is now generating huge revenues for the industry with Canada leaping ahead of Australia last year to become the 6th largest music market in the world and SOCAN generating record revenues. Further, Music Canada turned its focus to Copyright Board reform, spurring a short Senate study on the issue and making it one of its top priorities for the upcoming copyright review.

As this was happening, the case before the Federal Court of Appeal remained undecided. That changed yesterday as hours after the Supreme Court released the Equustek decision, the FCA issued its judicial review decision, unanimously dismissing the industry’s arguments and upholding the Copyright Board’s decision as reasonable.

Much of the decision examines the standard of review in cases involving the Copyright Board. The ruling carefully canvasses the requisite standard, the deference owed to the Board, as well as its work and legal analysis. The court strongly affirms the reasonableness of the result, rejecting arguments that it failed to consider some evidence or that it was bound by market rates. As part of its analysis, the court emphasized the need for balance in copyright:

Even before the Supreme Court’s decision in SODRAC, it was well settled that the dual purposes of the Copyright Act – encouraging creativity and providing reasonable access to the fruits of creative endeavour – require careful balancing of user and creator rights.

It then concluded that the Board’s focus on the value of sound recordings – rather than the cost of input – is consistent with that balance (citing one of Parliamentary Secretary David Lametti’s articles written before being elected). It added:

if we protect works for their value and their value is not correlated to their input costs, the purposes of copyright – which are articulated in the principle of balance – do not require those costs to be considered. It was thus reasonably open to the Board to ignore these costs in its analysis.

The decision is not a surprise (I noted there were ample justifications for the outcome when it was released). Moreover, the campaign against the decision caught the attention of former Board chair William Vancise, who told a copyright conference last year:

Let me say that I found it completely unacceptable and totally inappropriate for such an association to lobby the Chairman of the Board, an independent quasi-judicial tribunal- and I am certainly not alone in this view. It showed a lack of respect for the institution. The proper forum for dealing with a decision that Music Canada’s clients don’t like is to take it to judicial review. I can go on at great length on the lobbying efforts of Music Canada but I think you get the picture. The real reason for the outrage is not so much its concern for the purity of the process or consistency in decision-making but rather the fact that Music Canada doesn’t like the tariff. It’s a question of whose ox is being gored.

Having now lost the judicial review and earned sharp criticism from Vancise, the music labels are left with few options other than a long-shot appeal to the Supreme Court and an acceleration of the campaign to overhaul the Board during the 2017 copyright review.


  1. The record labels asked the Supreme Court to hear their appeal of the circuit court ruling, but the justices declined.

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