On Monday, the Supreme Court will hear oral arguments in CBC v. SODRAC, an appeal from the Federal Court of Appeal’s decision on what copyright royalties are payable on ephemeral copies under the principles of technology neutrality.
The case (SCC No. 35918) is an appeal from 2014 FCA 84, which is in turn a 2012 decision of the Copyright Board (SODRAC Tariff 5 – Reproduction of Musical Works in Cinematographic Works for Private Use or For Theatrical Exhibit, 2009-2012).
The facts of the case relate to incidental or empheral copies made in the course of making a master copy for broadcast. The Court will likely also address the applicability of its 1990 decision in Bishop v. Stevens which required that royalties be paid on ephemeral copies and principles of ‘technology neutrality’ as discussed in the court’s 2012 ESA (2012 SCC 34) decision. In the decision under appeal, Federal Court of Appeal stated:
 The majority’s analysis [in the Supreme Court’s ESA decision] did not rely on nor refer to any of the shades of technological neutrality that it discussed in the earlier part of its reasons. As a result, ESA, while restating the principle of technological neutrality in copyright law, provides no guidance as to how a court should apply that principle when faced with a copyright problem in which technological change is a material fact.
Some of the key ideas of the proceeding, as characterized by the Federal Court of Appeal are:
 The Broadcasters emphasize that [a through-to-the-viewer] licence is consistent with the producer’s intention in obtaining a licence, which is to create a product that can be marketed to broadcasters or exhibitors who can then exploit it commercially. The fact that the rights acquired under a through-to-the-viewer licence may be limited in time or place does not detract from the essential feature of such a licence, which is that the producer obtains or “clears” all necessary rights for downstream users, within the temporal or geographical limits of the licence.
 As against this model, SODRAC has adopted a layered approach to licensing in which each link in the distribution chain must acquire (and pay for) the right to make the copies required for its commercial purposes. It is reasonable to assume that SOCRAC’S position is designed to maximize revenue for the artists it represents.
 SODRAC’s change in strategy corresponds with the adoption of new technology that generally requires producers to make multiple copies of a musical work in order to incorporate it into an audiovisual work, a process known as synchronisation. At the same time, computerized digital content management systems and digital projection systems require broadcasters or exhibitors of an audiovisual work to make multiple copies of the work in order to broadcast or exhibit it. These copies, described earlier in these reasons as ephemeral copies, are known as incidental copies…
In addition to the parties, CBC and Society for Reproduction Rights of Authors, Composers and Publishers in Canada (SODRAC) Inc., there are a number of interveners:
- Centre for Intellectual Property Policy and Ariel Katz
- Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic
- Canadian Musical Reproduction Rights Agency Ltd., Canadian Music Publishers Association, and International Confederation of Music Publishers
- Music Canada, International Federation of the Phonographic Industry, Canadian Council of Music Industry Associations, Canadian Independent Music Association and l’Association Québecoise de l’industrie du disque, du spectacle et de la vidéo
Copies of the factums are available from the Supreme Court’s website. Unfortunately, it appears that the hearing may not be webcast due to a protective order although the video of the argument will likely be posted online a few days after the hearing.
More information on other intellectual property proceedings at the Supreme Court are available on my Supreme Court litigation page. A hearing on Ramipril and Section 8 of the PM(NOC) Regulations will be held on April 20, 2015.
Update March 30, 2015: the webcast of the hearing has been posted by the Supreme Court.