The Canadian Recording Industry Association (“Association”) applied for judicial review of the decision of the Copyright Board (“Board”) with respect to the appropriate royalty rate payable under a tariff regarding permanent downloads, limited downloads and on-demand streaming. Specifically, the Association alleged that the Board applied the wrong standard of proof in relation to the determination of certain costs in the digital music business, that it erred in accepting inadmissible expert evidence, that it calculated the royalty rate on a faulty basis and that it failed to provide adequate reasons for its decision. The court dismissed the Association’s application. The court found that there was no basis in procedural fairness to challenge the manner in which the Board dealt with its evidence.

Administrative law – Decisions of administrative tribunals – Copyright Board – Intellectual property – Copyright – Recorded music – Regulation of rates – Judicial review – Evidence – Standard of proof – Procedural requirements and fairness – Failure to provide reasons

Canadian Recording Industry Assn. v. Society of Composers, Authors and Music Publishers of Canada, [2010] F.C.J. No. 1533, 2010 FCA 322, Federal Court of Appeal, December 1, 2010, Létourneau, Nadon and Pelletier JJ.A.

The Canadian Recording Industry Association (“Association”) is a group in whose members create, promote, market and distribute recorded music. The Society of Composers Authors and Music Publishers of Canada administers the performance and communication rights of musical works.

The Copyright Board (“Board”) certified Tariff No 22.A as the appropriate royalty rate payable with respect to permanent downloads, limited downloads and on-demand streaming. The Association attacked the Board’s decision by attacking its treatment of evidence. In particular, the Association argued that the Board did not assess the evidence before it in a manner consistent with the law and thus set the tariff without any evidentiary foundation. The court maintained that administrative tribunals are not bound to comply with the formal rules of evidence and, in any event, there was evidentiary foundation for the conclusion the Board drew.

The Association also alleged that the Board, having found that the appropriate proxy for the right to download a musical work is the price paid to reproduce a musical work on a CD, erred in failing to recognize that the full value of the production right was recognized in the tariff approved by the Board in an earlier decision. However, the court found that the Board did not err in establishing the value of the communication by telecommunication right independently of the reproduction right.

Regarding the Association’s argument that the Board’s reasons were wholly inadequate, the court held that the Board’s resort to its own expertise, with respect to the elements of the respondent’s expert analysis, did not make their reasons inadequate. This is because the purpose of giving reasons are fulfilled when the reasons for judgment establish a logical connection between the verdict and the basis for it; a detailed description of the judge’s process in arriving at the verdict is unnecessary.

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