Incorporation of musical work into audiovisual work was reproduction that attracted royalties

Federal appeal | Industrial and Intellectual Property

COPYRIGHT

Incorporation of musical work into audiovisual work was reproduction that attracted royalties

Copyright board exercised its mandate under s. 70.2 of Copyright Act (Can.), to settle terms of licences granted to two broadcasters by collective society that administered reproduction rights. Terms of licence reflected board’s view that royalties were payable with respect to ephemeral copies of works made by broadcasters in normal course of their production or broadcasting activities. Ephemeral copies were copies or reproductions that existed only to facilitate technological operation by which audiovisual work was created or broadcast. Broadcasters applied for judicial review. Application granted in part. If technological advances required making of more copies of musical work in order to get audiovisual work that incorporated it to market, those additional copies added value to enterprise and attracted additional royalties. Broadcasters’ argument that copy-dependent technology did not add value to enterprise and as result, there was no additional value to share with artists, was essentially economic argument. Board heard extensive evidence on argument and its conclusion had evidentiary foundation. There was no basis to interfere with board’s conclusion on economic justification. Broadcasters conceded that incorporation of musical work into audiovisual work was reproduction that attracted royalties. Board’s reasoning was grounded in Bishop v. Stevens (1990), 72 D.L.R. (4th) 97, 22 A.C.W.S. (3d) 568 (S.C.C.), where Supreme Court of Canada held that ephemeral recordings of performance of work made solely for purpose of facilitating broadcasting of that performance were, if unauthorized, infringement of copyright holders rights. Bishop v. Stevens continued to remain good law. Entertainment Software Assn. v. Society of Composers, Authors and Music Publishers of Canada (2012), 347 D.L.R. (4th) 193, 216 A.C.W.S. (3d) 218 (S.C.C.) (ESA), restated principle of technological neutrality in copyright law, but provided no guidance as to how court should apply principle when faced with copyright problem in which technological change was material fact. Nothing in ESA authorized board to create category of reproductions or copies which, by their association with broadcasting, would cease to be protected by Act. ESA did not overrule Bishop v. Stevens. Comments in ESA about technological neutrality had not changed law to point where board erred in finding that incidental copies were protected by copyright. However, formula imposed by board was flawed and discounted formula was amended.
Canadian Broadcasting Corp. v. SODRAC 2003 Inc. (Mar. 31, 2014, F.C.A., Marc Noel J.A., J.D. Denis Pelletier J.A., and Johanne Trudel J.A., File No. A-516-12, A-527-12, A-63-13) 241 A.C.W.S. (3d) 434.

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