Tariff, Away: Re:Sound v Motion Picture Association of Canada

By now, readers are no doubt familiar with the Supreme Court of Canada’s (“SCC”) July 12, 2012 release of judgments on the pentalogy of copyright cases. TheCourt.ca continues with its ongoing coverage of the cases, by considering Re:Sound v Motion Picture Association of Canada, [2012] 2 SCR 376 [Re:Sound] in this post. Along with its 4 sister-judgments and the recent passage of Bill C-11 or the Copyright Modernization Act, SC 2012, c 20, this decision is considered instrumental in changing the direction of Canadian copyright law. In Re:Sound for instance, the SCC grappled with the question of whether a sound recording, when combined with a video, as part of a cinematographic work, was subject to royalty payments to the musicians, under the “equitable remuneration” clause (s.19(1)) of the federally mandated Copyright Act, RSC 1985, c C-42 [Act]. The SCC ultimately deemed that such works are not tariffable, after considering statutory interpretation, Canada’s compliance with international copyright treaties, and the legal definition of the terms “sound recordings” and “soundtrack,” as pertaining to the Act. The implications for this decision rest mainly with sound recordings that are “[performed] in public or [communicated] to the public by telecommunication.”

Facts and Analysis

Re:Sound is a copyright collective that enforces, collects and distributes royalties on behalf of its members – the copyright owners of musical works. It applied to the Copyright Board of Canada for two new royalties to be introduced in Canada, which sought to levy additional tariffs on sound recordings when they were used and broadcasted by movie theatres (Tariff 7), and by radio and television stations, and other commercial “over-the-air, pay, specialty and other televising services” (Tariff 9). The basic purpose of both proposed tariffs, according to Re:Sound,  was to ensure that songwriters, composers and musicians of previously published musical works would be compensated every time the sound recordings were used for the purposes outlined by the two tariffs.

At issue in the appeal to the SCC was the interpretation of s.2 of the Act, specifically with respect to sound recordings:

 [S]ound recording” means a recording, fixed in any material form, consisting of sounds, whether or not of a  performance of a work, but excludes any soundtrack of a cinematographic work where it accompanies the cinematographic work (para 6).

Both parties were especially concerned with whether a soundtrack could be considered a sound recording. According to Re:Sound, if applied correctly, the proper definition of “sound recording” would include a soundtrack; the reason the term “soundtrack” was excluded from the s.2 definition of “sound recording” was because it was considered a part of a “cinematographic work,” which in turn was comprised of both audio and visual elements. According to Re:Sound then, copyright protection in a musical work that was part of a soundtrack was only afforded when it was part of the whole soundtrack, and not when it existed as a stand-alone recording. This made the tariffs necessary to ensure equitable remuneration for musicians and performers who lost out when their songs were “ripped” and separated from the soundtrack, or when they were performed, distributed or played separately from the whole soundtrack.

The Motion Picture Association of Canada and other respondents countered this proposition with the notion that the reason a soundtrack was excluded from the definition of “sound recording,” was because, as per the language of the Act, a musical work was considered a sound recording only when it did not become a part of a cinematographic work (presumably because of the visual component of a film that needed to be considered as well).  The respondents contended that the appellants interpretation of the relevant sections of s.2 were incorrect, and the wording of the statute was clear enough – a musical work would be considered a sound recording, and protected as one, unless it was a part of a soundtrack, in which case it would be protected as part of the cinematographic work as a whole. The proposed tariffs, according to the respondents, were thus unnecessary, since a work would be protected under copyright regardless of which category it fell under.

In it’s turn, the SCC did not deviate from the Copyright Board’s analysis with respect to the interpretation of the term “soundtrack” within the meaning of s.2 of the Act. It held that an independent musical work that was part of a soundtrack would be held part of the cinematographic work, and would be protected under the greater copyright of the overall work (the film – being made up of sound, dialogue, visuals and all music, etc.). Any recording extracted from this package would automatically be given the same protection as that of an independent musical work, namely, that of a “sound recording.” As such, the SCC deemed that the Board was correct in determining that the word “soundtrack” included pre-existing recordings, thereby disincluding them from the definition of “sound recording” when they accompanied a cinematographic work (para 52). What this means is that songs that form a part of a movie’s soundtrack do not have to be paid for when they are part of the entire cinematographic work (as deemed by the court), i.e. in movie theatres, on commercial television stations, etc. The SCC has thus prevented the introduction of Tariffs 7 and 9 into Canadian copyright law.

Implications

At heart, the issue seems to be one of commerce more than copyright because, as the SCC pointed out in the ruling, whether or not the actual recording would be protected does not depend on the Court’s interpretation to be a part of cinematographic works. The work would have been protected in any case, either as a stand-alone copyrighted musical work, or as part of the “complete” cinematographic work (paras 33-39). What the SCC seemed to have wanted to avoid then, was the excessive addition of tariffs on sound recordings in this case. However, the ultimate question of whether the ruling will benefit the “user” of the musical works more than the “creator,” remains up in the air. It might raise the question of whether the SCC is seeking to enforce stricter standards on the possible over-commercialization of copyright, and of intellectual property law in general. For instance, now that the movie theatres and television producers do not have to pay a separate and additional tariff when it comes to broadcasting sound recordings, on the one hand, the SCC has ensured that any attempts to overreach on the part of copyright owners has effectively been quashed. On the other hand, however, is the question of whether this move is in the best interests of the musicians and performers who produce or create the actual work, since they are not always the true owners of the works, but rather, the creators. This distinction then, might leave the musicians, who are actual creators of the works, and for whom, arguably, this judgment might have been passed, in the precarious position of neither being paid enough by record companies and producers, nor being able to enforce “fairer” royalties through collectives like Re:Sound.

The SCC’s judgment in this ruling might not have come much closer to pursuing the elusive balance between the rights of the users versus those of the creators that copyright law seeks to maintain. Commentators have cited the judgment as problematic, because it has now created the possibility of songwriters being able to be compensated for their work, but not the actual performers themselves. The primary issue concern then, still remains whether the copyright creators (who are also most often its owners) will lose because of this ruling.