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Supreme Court nixes double royalties for streaming or downloading music online

Under the law, a work is “performed” as soon as it is made available for on-demand streaming
Music streaming apps are shown in this Jan. 28, 2018 file photo. THE CANADIAN PRESS/Jenny Kane-AP

Songwriters are entitled to just one royalty — not two — when their music is streamed or downloaded through an online service, the Supreme Court of Canada has ruled.

The top court’s decision Friday clarifies the meaning of a Canadian copyright law provision dealing with communication of a work to the public online.

Canada ushered in the provision after signing on to an international treaty that obliged member countries to protect on-demand transmissions and give authors the right to control when and how their work is made available for downloading or streaming.

The Copyright Board of Canada ruled the legislative provision meant that making a song or other artistic work available was a separately protected activity for which there must be compensation.

The board said this entitled rights holders to two payments when a work is distributed online: one when it is made available on a platform such as iTunes or Spotify, and a second when it is actually streamed or downloaded by a listener.

The Federal Court of Appeal tossed out the board’s decision.

The Society of Composers, Authors and Music Publishers of Canada and Music Canada, which represents major record labels, asked the Supreme Court to overturn the Court of Appeal’s decision and adopt the board’s interpretation.

Parties including Apple Canada and major telecommunications companies said the court should reject this position on the grounds copyright law does not require payment of two royalties each time a work is streamed or downloaded.

In writing for a majority of the Supreme Court, Justice Malcolm Rowe said the Copyright Act does not exist solely for the benefit of authors.

“Its overarching purpose is to balance authors’ and users’ rights by securing just rewards for authors while facilitating public access to works,” Rowe wrote.

“When this balance is achieved, society is enriched. Authors are encouraged to produce more works, and users gain access to works which they can use to inspire their own original artistic and intellectual creations.”

The court said the board’s interpretation undermined the purpose of copyright law, violating the principle of “technological neutrality” by requiring users to pay additional royalties to access works online.

“This principle holds that, absent parliamentary intent to the contrary, the Copyright Act should not be interpreted so as to favour or discriminate against any form of technology,” Rowe said.

“It protects authors and users by ensuring that works attract the same rights and give rise to the same royalties regardless of the technological means used to distribute the works.”

The Copyright Act provides authors with rights related to the reproduction and performance of their works.

“Similar to off-line distributions, downloading or streaming works will continue to engage only one copyright interest and require paying one royalty — a reproduction royalty for downloads or a performance royalty for streams,” Rowe wrote.

Under the law, a work is “performed” as soon as it is made available for on-demand streaming, he added. At that point, a royalty is payable. If the work is later streamed by a user, no additional royalty is payable because the stream is part of a continuous act of performance that began when the work was made available.

The value of these rights was not at issue in the appeal, Rowe noted. Therefore, setting the appropriate royalties when these rights come into play is a matter for the board to decide.

– Jim Bronskill, The Canadian Press