Making copies of a copyright-protected work implicates the reproduction right, a right that rests exclusively with the copyright holder for the musical work and requires broadcasters to secure a licence to communicate the work.
Administrative law – Broadcast-incidental copying – Copyright – Copyright Board – Correctness – Decisions of administrative tribunals – Intellectual property – Judicial Review – Reasonableness simpliciter – Recorded music – Standard of Review
Canadian Broadcasting Corp. v. SODRAC 2003 Inc.,  S.C.J. No. 57, 2015 SCC 57, Supreme Court of Canada, November 26, 2015, McLachlin C.J. and Abella, Rothstein, Cromwell, Moldaver, Karakatsanis, Wagner, Gascon and Côté JJ.
The appellant Canadian Broadcasting Corporation (“CBC”) is a producer and broadcaster of television programs. When a program contains copyright protected musical works, CBC must ensure that it has secured all necessary licences for the work in order to reproduce and broadcast the work as part of a television program.
The respondent Society for Reproduction Rights of Authors, Composers and Publishers in Canada (SODRAC) Inc. is a collective society organized to manage the reproduction rights of its members.
In 2012, the Copyright Board, in setting the terms of a licence between CBC and SODRAC for the 2008‑2012 period, held CBC’s broadcast-incidental copying activity engaged the reproduction right, that a licence for such copies could not be implied from synchronization licences covering the production process, and CBC required a separate reproduction licence to legitimatize its broadcast-incidental copying. Broadcast-incidental copying refers to copies made to facilitate broadcasting. Making copies of a copyright-protected work implicates the reproduction right, a right that rests exclusively with the copyright holder for the musical work and requires broadcasters to secure a licence to communicate the work. The Copyright Board determined the appropriate valuation for CBC’s licence and issued a licence authorizing CBC to reproduce works in the SODRAC repertoire.
On appeal to the Federal Court of Appeal, the Court affirmed the Copyright Board’s decision, subject to one technical amendment to the formula for determining CBC’s licence.
CBC appealed to the Supreme Court of Canada. The issues on appeal were whether broadcast-incidental copies engaged the reproduction right; whether a licence for broadcast-incidental copies should be implied in synchronization licences; and if a licence for broadcast-incidental copies was required, whether the Board erred in setting the value of the licence.
On the first and second issues, the majority held whether broadcast‑incidental copies engaged the reproduction right is a question of law. There is generally a presumption that decisions of administrative bodies should receive deference when interpreting or applying their home statutes; however, because of the “unusual statutory scheme under which the Copyright Board and the Court may each have to consider the same legal question at first instance,” the presumption is rebutted and the standard of correctness applies. The Supreme Court held the Copyright Board was correct in finding that broadcast‑incidental copying engages the reproduction right, consistent with the Supreme Court’s decision in Bishop v. Stevens,  2 S.C.R. 467, and that a licence to make broadcast‑incidental copying should not be implied from synchronization licences, as the synchronization licences do not give any indication they ought to be read to include the right to make broadcast‑incidental copies.
On the third issue, the majority held the Copyright Board erred in failing to consider the principles of technological neutrality and balance in setting the valuation of the licence. The Copyright Board’s decision establishing the monetary value of a broadcast incidental copying licence involves questions of mixed fact in law and a standard of reasonableness applies. The principle of technological neutrality holds that it would be improper to impose a higher copyright licensing cost on the user of one technology than would be imposed on the user of a different technology where there is no difference between the two in terms of the value each user derives from the reproduction; conversely, where the user of one technology derives greater value from the use of reproductions of copyrighted work than another user using reproductions of the copyright protected work in a different technology, the copyright holder should be entitled to a larger royalty from the user who obtains such greater value. The principle of balance holds that copyright law should maintain a balance between promoting the public interest in the encouragement and dissemination of works and obtaining a just reward for the creators. The Copyright Board’s decision was unreasonable in that it applied a ratio that did not consider how the principles of technological neutrality and balance ought to be reflected in the licence fees imposed on CBC with regard to its television and internet broadcast‑incidental copying activity. The majority set aside the Copyright Board’s licence and remitted the matter to the Copyright Board for reconsideration of valuation in accordance with the principles of technological neutrality and balance.
This case was digested by Joel A. Morris of Harper Grey LLP. If you would like to discuss this case further, please feel free to contact him directly at firstname.lastname@example.org or review his biography at http://www.harpergrey.com.
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