Entertainment Software Association v. Society of Composers, Authors and Music Publishers of Canada
Supreme Court of Canada
The judgment of McLachlin C.J. and Deschamps, Abella, Moldaver and Karakatsanis JJ. was delivered by Abella AND Moldaver JJ. –
 In the video game publishing industry, the royalties for the reproduction of any musical works which are incorporated into the games are currently negotiated before the games are packaged for public sale. Once these rights have been negotiated, the owner of the copyright in the musical work has no further rights when the game is sold. The question in this appeal is whether the rights are nonetheless revived when the work is sold over the Internet instead of in a store. In our view, it makes little sense to distinguish between the two methods of selling the same work.
 The Copyright Board concluded that video games containing a musical work, the royalties to which have already been negotiated with the copyright owner, were nonetheless subject to a new fee when sold over the Internet ((2007), 61 C.P.R. (4th) 353). Its decision was upheld by the Federal Court of Appeal (2010 FCA 221, 406 N.R. 288). In our respectful view, the Board’s decision misconstrues the provisions at issue in the Copyright Act, R.S.C. 1985, c. C-42, ignoring decades of legislative history, and violates the principle of technological neutrality, which requires that the Act apply equally notwithstanding the technological diversity of different forms of media.
 The provision at issue in this appeal is s. 3(1)(f) of the Copyright Act, which states that copyright owners have the sole right
… in the case of any literary, dramatic, musical or artistic work, to communicate the work to the public by telecommunication… .
 The focus of this appeal is on the meaning of the word “communicate” in s. 3(1)(f), a term which is not defined in the Act. The Society of Composers, Authors and Music Publishers of Canada (SOCAN), which administers the right to “communicate” musical works on behalf of copyright owners, applied to the Board for a tariff under this provision to cover downloads of musical works over the Internet. The Entertainment Software Association and the Entertainment Software Association of Canada (collectively, ESA), which represent a broad coalition of video game publishers and distributors, objected to the tariff, arguing that “downloading” a video game containing musical works did not amount to “communicating” that game to the public by telecommunication under s. 3(1)(f). Instead, a “download” is merely an additional, more efficient way to deliver copies of the games to customers. The downloaded copy is identical to copies purchased in stores or shipped to customers by mail, and the game publishers already pay copyright owners reproduction royalties for all of these copying activities.
 We agree with ESA. In our view, the Board’s conclusion that a separate, “communication” tariff applied to downloads of musical works violates the principle of technological neutrality, which requires that the Copyright Act apply equally between traditional and more technologically advanced forms of the same media: Robertson v. Thomson Corp.,  2 S.C.R. 363, at para. 49. The principle of technological neutrality is reflected in s. 3(1) of the Act, which describes a right to produce or reproduce a work “in any material form whatever”. In our view, there is no practical difference between buying a durable copy of the work in a store, receiving a copy in the mail, or downloading an identical copy using the Internet. The Internet is simply a technological taxi that delivers a durable copy of the same work to the end user.
 This argument is echoed by David Vaver in his book, Intellectual Property Law: Copyright, Patents, Trade-marks (2nd ed. 2011), where he appears to criticize the Board’s decision in this particular case:
In principle, substitute delivery systems should compete on their merits: either both or neither should pay. Copyright law should strive for technological neutrality.
In the past, whether a customer bought a sound recording or video game physically at a store or ordered it by mail made no difference to the copyright holder: it got nothing extra for the clerk’s or courier’s handover of the record to the customer. Now, because of the telecommunication right, copyright holders can and do charge extra for electronic delivery of identical content acquired off websites. [Emphasis added; pp. 172-73.]
 ESA’s argument is also consistent with this Court’s caution in Théberge v. Galerie d’Art du Petit Champlain inc.,  2 S.C.R. 336, that the balance in copyright between promoting the public interest in the encouragement and dissemination of works and obtaining a just reward for the creator requires recognizing the “limited nature” of creators’ rights:
The proper balance among these and other public policy objectives lies not only in recognizing the creator’s rights but in giving due weight to their limited nature. In crassly economic terms it would be as inefficient to overcompensate artists and authors for the right of reproduction as it would be self-defeating to undercompensate them. Once an authorized copy of a work is sold to a member of the public, it is generally for the purchaser, not the author, to determine what happens to it. [Emphasis added; para. 31.]
 The traditional balance between authors and users should be preserved in the digital environment: Carys Craig, “Locking Out Lawful Users: Fair Dealing and Anti-Circumvention in Bill C-32”, in Michael Geist, ed., From “Radical Extremism” to “Balanced Copyright”: Canadian Copyright and the Digital Agenda (2010), 177, at p. 192.
 SOCAN has never been able to charge royalties for copies of video games stored on cartridges or discs, and bought in a store or shipped by mail. Yet it argues that identical copies of the games sold and delivered over the Internet are subject to both a fee for reproducing the work and a fee for communicating the work. The principle of technological neutrality requires that, absent evidence of Parliamentary intent to the contrary, we interpret the Copyright Act in a way that avoids imposing an additional layer of protections and fees based solely on the method of delivery of the work to the end user. To do otherwise would effectively impose a gratuitous cost for the use of more efficient, Internet-based technologies.
 The Board’s misstep is clear from its definition of “download” as “a file containing data … the user is meant to keep as his own” (para. 13). The Board recognized that downloading is a copying exercise that creates an exact, durable copy of the digital file on the user’s computer, identical to copies purchased in stores or through the mail. Nevertheless, it concluded that delivering a copy through the Internet was subject to two fees – one for reproduction and one for communication – while delivering a copy through stores or mail was subject only to reproduction fees. In coming to this conclusion, the Board ignored the principle of technological neutrality.
 Justice Rothstein argues (at para. 126) that the Board can avoid such “double-dipping” by copyright owners by adjusting the two fees in a way that “divides the pie” between the collective societies administering reproduction rights, on the one hand, and communication rights, on the other. However, this seems to us to undermine Parliament’s purpose in creating the collective societies in the first place, namely to efficiently manage and administer different copyrights under the Act. This inefficiency harms both end users and copyright owners:
When a single economic activity implicates more than one type of right and each type is administered by a separate collective, the multiplicity of licences required can lead to inefficiency… . The result is that the total price the user has to pay for all complements is too high … .
[T]he fragmentation of licences required for single activities among several monopolist-collectives generates inefficiencies, from which copyright owners as a whole also suffer… .
(Ariel Katz, “Commentary: Is Collective Administration of Copyrights Justified by the Economic Literature?”, in Marcel Boyer, Michael Trebilcock and David Vaver, eds., Competition Policy and Intellectual Property (2009), 449, at pp. 461-63)
 In our view, the Board improperly concluded that the Internet delivery of copies of video games containing musical works amounts to “communicating” the works to the public. This view is evidenced by the legislative history of the Copyright Act, which demonstrates that the right to “communicate” is historically connected to the right to perform a work and not the right to reproduce permanent copies of the work.
 As this Court held in Bishop v. Stevens,  2 S.C.R. 467, at pp. 473-74, the 1921 Canadian Copyright Act was based on, and designed to implement, the following provisions of the 1886 Convention of Berne for the Protection of Literary and Artistic Works, as revised in the 1908 Berlin Revision:
The stipulations of the present Convention shall apply to the public representation of dramatic or dramatico-musical works and to the public performance of musical works, whether such works be published or not.
The authors of musical works shall have the exclusive right of authorizing (1) the adaptation of those works to instruments which can reproduce them mechanically; (2) the public performance of the said works by means of these instruments.
Authors of literary, scientific or artistic works shall have the exclusive right of authorizing the reproduction and public representation of their works by cinematography.
 These articles were reflected in the introductory paragraph to s. 3(1) of the Copyright Act, 1921, S.C. 1921, c. 24, which granted
… the sole right to produce or reproduce the work or any substantial part thereof in any material form whatsoever, to perform, or in the case of a lecture to deliver, the work or any substantial part thereof in public; if the work is unpublished, to publish the work or any substantial part thereof; …
 In the 1921 Act, “performance” was defined in s. 2(q) as
… any acoustic representation of a work and any visual representation of any dramatic action in a work, including such a representation made by means of any mechanical instrument;
 The right to perform historically presupposed a live audience that would be present at the site where the performance took place. With the advent of radio broadcasting, however, a debate emerged about how this new technology should be treated under copyright law, reminiscent of the current debate over Internet technologies. The international consensus was that radio broadcasting should be treated as an extension of the existing performance right, in order to cover distant audiences: Paul Goldstein and P. Bernt Hugenholtz, International Copyright: Principles, Law, and Practice (2nd ed. 2010), at §188.8.131.52; Pierre-Emmanuel Moyse, Le droit de distribution: analyse historique et comparative en droit d’auteur (2007), at pp. 309-10. The Rome Revision (1928) of the Berne Convention therefore extended the Article 11 performance right. The new Article 11bis conferred on authors the “exclusive right of authorizing the communication of their works to the public by radiocommunication”.
 Canada acceded to the amended Berne Convention in 1928, and enacted s. 3(1)(f) of the Copyright Act in 1931 to incorporate the new Article 11bis:
(f) In case of any literary, dramatic, musical or artistic work, to communicate such work by radio communication.
(Copyright Amendment Act, 1931, S.C. 1931, c. 8, s. 3)
 At the same time, the 1931 Copyright Amendment Act amended the definition of “performance” to accommodate this new concept of performances at a distance:
“performance” means any acoustic representation of a work … including a representation made by means of any mechanical instrument or by radio communication. [s. 2 (3)]
 Like a performance, communicating a work by radio communication (i.e., a radio broadcast) under s. 3(1)(f) involved an “acoustic representation” of a work. Also like a performance, communication under s. 3(1)(f) did not contemplate the delivery of permanent copies of the work, since such a delivery was not possible through the means of Hertzian radio waves.
 This interpretation of the original s. 3(1)(f) is supported by the legislative debates. In explaining the purpose of this provision to Parliament, the Minister responsible for the amendments, C. H. Cahan, stated that s. 3(1)(f) was intended to bring the Copyright Act into conformity with the Rome Revision of the Berne Convention (House of Commons Debates, vol. 1, 2nd Sess., 17th Parl., April 23, 1931, at pp. 899-900), and that “radio communication” was a form of performance:
In England, the courts have decided that radio communication comes within the meaning of the word performance;but in order to make it clear that the author’s rights include not only the right of performance by acoustic representation and so forth, but also by radio communication, we have added those words “or by radio communication” to the present definition of performances as contained in the act… . I am simply adding the words “or by radio communication” to make it clear that in respect of radio communication the author has exactly the same rights as he has in relation to other performances of his work. [Emphasis added.]
(Vol. 3, June 8, 1931, at p. 2399)
 This was also the interpretation of the original s. 3(1)(f) by this Court in Composers, Authors and Publishers Assn. of Canada Ltd. v. CTV Television Network Ltd.,  S.C.R. 676. The Court held that signals transmitted from CTV to its affiliates did not communicate “musical works” – at the time defined as “reduced to writing” – but instead communicated a “performance” of the works. In obiter, the Court went on to hold that Article 11bis of the Rome Convention, on which s. 3(1)(f) was based, was intended to cover public performances by radio broadcasting (pp. 680-82). Moreover, it held that “communication” is “apt to include performances in its meaning” (p. 681). As a result, the Court concluded that s. 3(1)(f) must include the exclusive right of public performance by radio broadcasting.
 After 1931, there were no changes to s. 3(1)(f) until 1988. In 1988, s. 3(1)(f) was amended to read as follows:
(f) in the case of any literary, dramatic, musical or artistic work, to communicate the work to the public by telecommunication… .
(Canada-United States Free Trade Agreement Implementation Act, S.C. 1988, c. 65, s. 62)
 SOCAN argues that the 1988 amendment from “radio communication” to “telecommunication” demonstrates Parliament’s intent to remove all reference in s. 3(1)(f) to conventional performance or broadcasting activities, and to expand the communication right to technologies that involve transmitting data in a way that gives end users a permanent copy of the work.
 With respect, we disagree. The 1988 amendments to the Copyright Act found at ss. 61 to 65 of the Canada-United States Free Trade Agreement Implementation Act, were enacted in order to give effect to Articles 2005 and 2006 of the 1987 Canada-U.S. Free Trade Agreement (CUFTA): see Canadian Wireless Telecommunications Assn. v. Society of Composers, Authors and Music Publishers of Canada, 2008 FCA 6,  3 F.C.R. 539 (CWTA v. SOCAN), at para. 27. Before CUFTA, Canadian courts had held that “radio communication” under the former s. 3(1)(f) was limited to Hertzian radio waves and did not extend to communication by co-axial cables: Canadian Admiral Corp. v. Rediffusion, Inc., Ex. C.R. 382, at p. 410. CUFTA, however, required Canada to compensate copyright owners for the retransmission of television signals that were sent over cable lines. The amendments were therefore designed to ensure that cable companies, and not just radio broadcasters, would also be captured under s. 3(1)(f): John S. McKeown, Fox on Canadian Law of Copyright and Industrial Designs (4th ed. (loose-leaf)), at pp. 21-86, 21-87 and 29-1.
 In this context, the replacement of the words “radio communication” with “telecommunication” should be understood as merely expanding the means of communicating a work – that is, from radio waves (“by radio communication”) to cable and other future technologies (“to the public by telecommunication”). In our view, by substituting the word “telecommunication” in 1988, Parliament did not intend to change the fundamental nature of the communication right, which had for over 50 years been concerned with performance-based activities. Instead, Parliament only changed the means of transmitting a communication. The word “communicate” itself was never altered.
 Parliament’s addition of the phrase “to the public” to s. 3(1)(f) also supports this interpretation of the 1988 amendments. Before 1988, there was no doubt that all communications were “to the public”, as the nature of a broadcast through radio waves was necessarily public. The term “telecommunication”, however, risked introducing ambiguity into the Act, as telecommunication could also include private communications. By adding the phrase “to the public” with the term “telecommunication” in 1988, Parliament clarified its intent to maintain the communication right as a category of performance right.
 Therefore, we agree with Rothstein J. (at para. 98) that there is a “historic relationship” between the performance right and the communication right in the Copyright Act, but we disagree with his conclusion that Parliament intended to sever this relationship based on the 1988 amendments. In our view, this historical connection between communication and performance still exists today. With respect, the Board ignored this connection when it concluded that transmitting a download of a musical work over the Internet could amount to a “communication”.
 The Board’s conclusion was based in part on its erroneous view that a “download” is indistinguishable from a “stream”. Although a download and a stream are both “transmissions” in technical terms (they both use “data packet technology”), they are not both “communications” for purposes of the Copyright Act. This is clear from the Board’s definition of a stream as “a transmission of data that allows the user to listen or view the content at the time of transmissionand that isnot meant to be reproduced” (para. 15). Unlike a download, the experience of a stream is much more akin to a broadcast or performance.
 The Board also appears to have relied on Binnie J.’s observation in Society of Composers, Authors and Music Publishers of Canada v. Canadian Assn. of Internet Providers, 2 S.C.R. 427 (SOCAN v. CAIP), that a work has necessarily been “communicated” when, “[a]t the end of the transmission, the end user has a musical work in his or her possession that was not there before” (at para. 45), and on CWTA v. SOCAN, where Sharlow J.A. evoked SOCAN v. CAIP to hold that “[t]he word “communication” connotes the passing of information from one person to another” (paras. 19-20).
 As noted by Justice Rothstein, however, the comments in SOCAN v. CAIP were obiter, as the meaning of “communicate” in s. 3(1)(f) was not directly in issue in that case. Neither SOCAN v. CAIP nor CWTA v. SOCAN examined the legislative history behind the term “communicate” or the connection between communication and performance.
 For the same reason, we cannot agree with Justice Rothstein’s dependence on the dictionary definition of the word “communicate” to mean any transmission of data, including a download which provides the user with a durable copy of the work. Dictionaries, while often offering a useful range of definitional options, are of little assistance in identifying what a word means when it is orphaned from its context: Ruth Sullivan, Sullivan and Driedger on the Construction of Statutes (4th ed. 2002), at p. 27; see also Ontario v. Canadian Pacific Ltd.,  2 S.C.R. 1031, at para. 67 (per Gonthier J.). In our view, using dictionary definitions in this case has the effect of ignoring a solid line of legislative history connecting the term “communicate” to performance-based activities.
 The Board’s interpretation of s. 3(1)(f) also ignores the historic distinction between performance-based rights and reproduction-based rights, improperly extending the term “communicate” to capture the Internet delivery of permanent copies of a work. In our view, this interpretation goes far beyond what the term “communicate” was ever intended to capture.
 In enacting s. 3(1), Parliament distinguished between rights of reproduction and performance:
3. (1) For the purposes of this Act, “copyright” means the sole right to produce or reproduce the work or any substantial part thereof in any material form whatsoever, to perform, or in the case of a lecture to deliver, the work or any substantial part thereof in public … .
(Copyright Act, 1921)
 This distinction between reproduction and performance in s. 3(1) has been maintained all the way through to the current version of the Act.
 Performing a work is fundamentally different than reproducing it. As this Court concluded in Bishop v. Stevens, a performance is impermanent in nature, and does not leave the viewer or listener with a durable copy of the work:
The right to perform (including radio broadcast), and the right to make a recording, are separately enumerated in s. 3(1). They are distinct rights in theory and in practice … . [T]he rights to perform and to record a work are considered sufficiently distinct that they are generally assigned separately, and administered by different entities.
… A performance is by its very nature fleeting, transient, impermanent. When it is over, only the memory remains… . Furthermore, no imitation of a performance can be a precise copy. A recording, on the other hand, is permanent. It may be copied easily, privately, and precisely. Once a work has been recorded, the recording takes on a life of its own… . Once the composer has made or authorized a recording of his work, he has irrevocably given up much of his control over its presentation to the public. These are the reasons why the rights to perform and to record are recognized as distinct in the Act, and why in practice a composer may wish to authorize performances but not recordings of his work. [Emphasis added; pp. 477-79.]
 In Bishop, the alleged infringer argued that the “right to broadcast” a musical work under s. 3(1)(f) included the incidental right to make an ephemeral copy for the sole purpose of facilitating the broadcast. This Court ultimately concluded that the right to perform – including the right to communicate – could not be understood to include the right to reproduce, since performing and communicating are different in nature from making a recording.
 Even though Bishop interpreted the pre-1988 version of the Copyright Act (before the “telecommunication” amendment), the distinction between performance-based and reproduction-based rights established in s. 3(1) is evidenced in the provisions of the current Act. For example, in s. 2.2(1), the term “publication” includes “making copies”, but expressly excludes “the performance in public, or the communication to the public by telecommunication” of a work. Similarly, the educational institutions exception in s. 29.4(2) refers to the right to “reproduce” and the right to “communicate by telecommunication to the public” as distinct rights. The same is true of s. 15(1), which categorizes neighbouring rights under the Act into two categories: the right to “communicate” and “perform” a performance, and the right to “reproduce” a fixation of the performance.
 The distinction between performance and communication rights on the one hand and reproduction rights on the other is also evident in the collective administration of copyright tariffs under the Copyright Act. In 1993, SOCAN – a performing rights society – was put in charge of administering the communication right in s. 3(1)(f) in relation to musical works: S.C. 1993, c. 23, s. 3: see McKeown, at pp. 3-12, 27-2 and 27-3. These provisions are contained in a section of the Act entitled “Collective Administration of Performing Rights and of Communication Rights”: ss. 67 to 68.2 (S.C. 1997, c. 24, s. 45): see McKeown, at p. 26-3. Even the Copyright Board itself categorizes its decisions relating to musical works into two categories: “Public Performance of Music” and “Reproduction of Musical Works”: http://www.cb-cda.gc.ca/decisions/index-e.html.
 Therefore, the term “communicate” in s. 3(1)(f), which has historically been linked to the right to perform, should not be transformed by the use of the word “telecommunication” in a way that would capture activities akin to reproduction. Such transformation would result in abandoning the traditional distinction in the Act between performance-based rights and rights of reproduction. There is no evidence either in 1988 or in subsequent amendments to the Act that Parliament intended such abandonment.
 SOCAN submits that the distinction between reproduction and performance rights in Bishop actually supports its view that downloading a musical work over the Internet can attract two tariffs. Since reproduction and performance-based rights are two separate, independent rights, copyright owners should be entitled to a separate fee under each right. This is based on the Court’s reliance in Bishop, at p. 477, on a quote from Ash v. Hutchinson & Co. (Publishers), Ltd.,  2 All E.R. 1496 (C.A.), at p. 1507, per Greene L.J.:
Under the Copyright Act, 1911 [on which the Canadian Act was based], … the rights of the owner of copyright are set out. A number of acts are specified, the sole right to do which is conferred on the owner of the copyright. The right to do each of these acts is, in my judgment, a separate statutory right, and anyone who without the consent of the owner of the copyright does any of these acts commits a tort; if he does two of them, he commits two torts, and so on. [Emphasis added.]
 In our view, the Court in Bishop merely used this quote to emphasize that the rights enumerated in s. 3(1) are distinct. Bishop does not stand for the proposition that a single activity (i.e., a download) can violate two separate rights at the same time. This is clear from the quote in Ash v. Hutchinson, which refers to “two … acts”. In Bishop, for example, there were two activities: 1) the making of an ephemeral copy of the musical work in order to effect a broadcast, and 2) the actual broadcast of the work itself. In this case, however, there is only one activity at issue: downloading a copy of a video game containing musical works.
 Nor is the communication right in s. 3(1)(f) a sui generis rightin addition to the general rights described in s. 3(1). The introductory paragraph defines what constitutes “copyright”. It states that copyright “means” the sole right to produce or reproduce a work in any material form, to perform a work in public, or to publish an unpublished work. This definition of “copyright” is exhaustive, as the term “means” confines its scope. The paragraph concludes by stating that copyright “includes” several other rights, set out in subsections (a) through (i). As a result, the rights in the introductory paragraph provide the basic structure of copyright. The enumerated rights listed in the subsequent subparagraphs are simply illustrative: Sunny Handa, Copyright Law in Canada (2002), at p. 195; see also Apple Computer Inc. v. Mackintosh Computers Ltd.,  1 F.C. 173 (T.D.), at p. 197. The rental rights in s. 3(1)(i) referred to by Justice Rothstein, for example, can fit comfortably into the general category of reproduction rights.
 In our view, therefore, the Board’s conclusion that the Internet delivery of a permanent copy of a video game containing musical works amounted to a “communication” under s. 3(1)(f) should be set aside.
Appeal allowed with costs, LeBel, Fish, Rothstein and Cromwell JJ. dissenting.
Solicitors for the appellants: McCarthy Tétrault, Toronto.
Solicitors for the respondent: Gowling Lafleur Henderson, Ottawa.
Solicitors for the intervener CMRRA-SODRAC Inc.: Cassels Brock & Blackwell, Toronto.
Solicitor for the intervener the Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic: University of Ottawa, Ottawa.
Solicitors for the intervener Cineplex Entertainment LP: Gilbert’s, Toronto.
This page has been generated using Mincov Legal Markup Language (“MLML”). While every effort has been made to ensure accuracy and currency of this document, Mincov Law Corporation makes no warranty, representation or undertaking, expressed or implied, nor does it assume any liability, direct or indirect, or responsibility for the accuracy, currency, usefulness or continued availability of this document.The official version of this document is located at http://scc.lexum.org/en/2012/2012scc34/2012scc34.html.