Canadian Copyright Board Decides Downloadable Ringtones Are Subject to Copyright

In a recent decision, the Canadian Copyright Board (Board) has ruled that downloadable ringtones are subject to copyright royalties. Pursuant to the Canadian Copyright Act, one of the rights of a copyright owner of a musical work is the right to communicate the work to the public by telecommunication. Therefore, the Board has jurisdiction to impose royalties only if the copyrighted work is a "communication to the public". The primary legal question before the tribunal was whether the delivery of ringtones to cell phone subscribers is such a communication. The wireless carriers had argued before the Board that while downloading a musical ringtone involves a communication of a musical work by telecommunication, the communication is not public. Rather, they contended, the transmission of a ringtone involves a point-to-point, one-to-one delivery of a file purchased by a consumer from a carrier's web site to a consumer's handset. However, the Board decided that the transmission of the ringtone to the single recipient is only one stage of the process. Before transmission to the recipient, ringtones must first be uploaded to a web site for the specific purpose of marketing and communicating them to any subscriber who wishes to download them. The Board held that wireless carriers offer to sell a musical ringtone to all their subscribers, not simply to one individual, and the fact that an individual member of the public receives the work does not change what would otherwise be a communication to the public into a private transaction. [The transmission to the public does not have to be simultaneous.] Consequently, messages with identical content such as musical ringtones sent to multiple individuals can be a communication to the public. The wireless carriers also argued that the effective royalty rate applicable to "mastertones" should be lower than that for synthesized ringtones. Mastertones are ringtones which use the actual recorded version of the musical work. The wireless carriers submitted that the higher price which they charge for mastertones results solely from the addition of non-SOCAN inputs, that is, the original sound recording and the performance embedded in the recording. Consumers, they claimed, tend to purchase ringtones based on the performer rather than the author. Although recognizing that part of the added value of mastertones is attributable to producers and performers, the Board held that authors also contribute to the added value of mastertones and therefore the same royalty rate should apply to all ringtones. For the full decision of the Copyright Board, visit: http://www.cb-cda.gc.ca/decisions/m20060818-b.pdf Summary by: Katharine McGinnis