The Supreme Court of Canada Rules That All Internet Transmissions Into Canada Are Covered By Canadian Law

August 2004

Internet, Music Publishers, Record Labels

The Supreme Court of Canada today confirmed that internet transmissions into the country from outside are covered by domestic Canadian copyright law, regardless of the origin of the transmission. The ruling arises from a court case in Canada, in which the international and Canadian Recording Industry organisations, IFPI and CRIA, and other rights holders organisations sought to confirm that communications which travel across Canada’s border, and are received in the country, should be subject to Canadian copyright law. The intervention took place following an appeal by Canadian Internet companies against a tariff by the Society of Canadian Composers, Authors and Music Publishers (SOCAN), a performing rights society. The Supreme Court confirmed the industry’s understanding of the law, ensuring that rights holders are protected under the Canadian Copyright Act against unauthorised transmissions in Canada, regardless of where they originate.
However, Canadian Supreme Court has also ruled that ISPs are not subject to royalty fees. Canada’s high court ruled that the creation of a cache copy by Internet providers is part of their business to provide access to users, who have an expectation of freedom and privacy , and should not mean the providers have to pay royalties, as proposed by the Society of Composers, Authors and Music Publishers of Canada (SOCAN), which has fought for nearly nine years for the fees.
In the Supreme Court’s decision, styled as Canadian Association of Internet Providers v Society of Composers, Authors and Music Publishers of Canada, the Court found that ISPs do not “communicate” music files by transmitting them on demand over the Internet. Also, settling a controversial issue left from the prior Federal Court of Appeal decision, the Supreme Court held that ISPs do not infringe copyright by temporarily storing (caching) files in the course of transmitting them. The Court applied section 2.4(1)(b) of the Copyright Act which deems that providers of “the means of telecommunication” do not “communicate” works for the purpose of copyright infringement. The Court found that caching files was a “serendipitous consequence of improvements in Internet technology” and should not cause ISPs to lose the benefit of this exemption. Writing for the majority, Mr. Justice Binnie said that “by enacting s. 2.4(1)(b) of the Copyright Act, Parliament made a policy distinction between those who abuse the Internet to obtain ‘cheap music’ and those who are part of the infrastructure of the Internet itself. It is clear that Parliament did not want copyright disputes between creators and users to be visited on the heads of the Internet intermediaries.

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