Canadian Copyright Board Rules on Private Copying Levies and P2P Music Downloading

On December 12, 2003, the Copyright Board of Canada issued a decision on private copying levies for 2003 and 2004 and suggested that music downloaded from peer-to-peer (P2P) networks was legal, provided it was in accordance with the private copying exemption found under s. 80 of the Copyright Act (the Act). Although the Board froze all existing private copying levies, it did create new levies for non-removable memory permanently embedded in digital audio recorders. As a result, current levies of 29 ¢ on audio cassettes of 40 minutes or longer (no levy applies to tapes of shorter length), 21 ¢ on CD-Rs and CD-RWs, and 77 ¢ on CD-R Audio, CD-RW Audio, and MiniDiscs, will remain in effect until the end of 2004. For devices such as MP3 players that qualify as non-removable memory permanently embedded in audio recorders, new levies were created on a sliding scale related to memory capacity. As a result, units with memory storage of 1 Gigabyte (Gb) or less will be subject to a levy of $2. Recorders with memory capacity ranging from 1 to 10 Gbs will face a levy of $15 per unit. Units with memory storage exceeding 10 Gbs will have a $25 levy imposed. The Board's decision also denied the request of the Canadian Private Copying Collective (CPCC) for levies on other forms of digital media and scrapped its "zero-rating" program. In denying the CPCC's request for levies on blank DVDs, removable memory cards, and removable micro hard drives, the Board concluded that these levies were unwarranted. In the Board's opinion, the evidence presented failed to prove that these types of recording media were ordinarily used by individuals to copy music. As for the CPCC's "zero-rating" program, it was terminated on the basis that there was no legal authority under the Act to create the program's levy exemptions. Accordingly, manufacturers and importers of blank audio recording media may not sell audio cassettes, CD-R Audio, CD-RW Audio, and MiniDiscs free of a levy to such entities as religious organizations, broadcasters, law enforcement agencies, courts, tribunals, court reporters, provincial ministries of education, members of the Association of Universities and Colleges of Canada, and the music and advertising industries. Arguably, the more eye-catching aspect of the decision was the Board's opinion regarding the apparent legality of music downloaded by Canadians through P2P networks. As noted by the Board, Part VIII of the Act was introduced in March 1998 to address the practical problem of enforcement in the private copying context. A compromise had been struck whereby levies were added to blank audio recording media to compensate copyright holders in exchange for the grant of a private copying exception. To that end, the Board affirmed that the electronic distribution of a musical work to the public clearly falls outside this exemption and is an infringement of the copyright holder's exclusive right under s. 3(1)(f) of the Act to communicate the work to the public by telecommunication. In considering the issue further, the Board stated that the private copying regime does not address the source of the material copied and there is no requirement that the source copy be non-infringing. The Board went on to note that the private copying exemption under s. 80 of the Act will apply as long as the copy is "for private use for the person making it, and must be made onto an audio recording medium", which includes hard drives on personal computers - even though there is currently no levy on this form of media. However, the Board also noted that this issue is ultimately up to the courts to decide, unless legislation intervenes. To view the Canadian Copyright Board's decision, see: http://www.cb-cda.gc.ca/decisions/c12122003-b.pdf. To view the Canadian Copyright Board's news release, see: http://www.cb-cda.gc.ca/news/c20032004nr-e.html. For more information on the decision, see: http://news.com.com/2100-1025-5121479.html. Summary by: Colin Adams