Supreme Court Of Canada Holds That Making Works Available Online Is Not A Separately Protected And Compensable Activity

On July 15, 2022, the Supreme Court of Canada (the SCC) issued its decision in Society of Composers, Authors and Music Publishers of Canada v Entertainment Software Association, 2022 SCC 30, in which it unanimously affirmed the decision of the Federal Court of Appeal finding that the Copyright Act (the Act) only requires users to pay one royalty fee to stream works online. The Court also revised the standard of review for decisions where an administrative body and courts share concurrent first instance jurisdiction over questions of law.

In 2012, the Government of Canada amended the Act to add section 2.4(1.1) to implement the rights and protections set out in the WIPO Copyright Treaty (the Treaty).  Section 2.4(1.1) amends section 3(1)(f) of the Act by clarifying that “communication of a work or other subject‑matter to the public by telecommunication includes making it available to the public by telecommunication in a way that allows a member of the public to have access to it from a place and at a time individually chosen by that member of the public”.

In the underlying tariff proceeding, the Copyright Board of Canada (the Board) concluded that section 2.4(1.1) deems the act of making works available to be a separately protected and compensable activity. This meant that two royalties would be payable when a work is distributed online: (1) when it is made available online; and (2) when the work is actually streamed or downloaded.  On appeal, the Federal Court of Appeal overturned the Board’s decision, finding that Parliament did not intend to create a new compensable making available right, and that, properly interpreted, section 2.4(1.1) did not subject downloads and streams to two royalties.

The SCC agreed, and dismissed the appeal.  On the issue of the appropriate standard of review, a seven to two majority of the SCC held that correctness was the appropriate standard and that concurrent first instance jurisdiction should be recognized as an additional correctness category analogous to those identified in Canada (Minister of Citizenship and Immigration) v Vavilov, 2019 SCC 65 (as previously reported by the E-TIPS® Newsletter here). The SCC also explained how Canada fully implemented its Treaty obligations. 

In dismissing the appeal, the SCC concluded that the Board’s interpretation of section 2.4(1.1) was inconsistent with its text and structure, undermined the purpose of the Act, and was not required by the Treaty. The SCC held that nothing in the text of section 2.4(1.1) indicates that Parliament intended to allow authors to charge two royalties for a single protected activity. In addition, the SCC noted that the Board’s interpretation undermined the Act by violating the principle of technological neutrality by requiring users to pay additional royalties to access works online.

Summary By: Michelle Noonan