The ‘fair dealing’ exemption curtails the right of the copyright owner to prevent unauthorized reproductions of a copyrighted work, in favour of the public right to reproduce the work for ‘statutorily recognized purposes’ (“SRP’s”), in accordance with the Copyright Act. Currently, these SRP’s include (1) research; (2) private study; (3) criticism; (4) review; and (5) news reporting. Bill C-11, The Copyright Modernization Act, which was recently passed after several failed attempts, will add three new categories to the list of SRP’s: (6) parody, (7) satire and (8) education. Bill C-11 will come into force on a day to be set by Cabinet, which is currently expected to be sometime in the Fall of 2012.
Two recent decisions of the Supreme Court of Canada (SCC) address the scope of the fair dealing exemption.
In Society of Composers, Authors and Music Publishers of Canada (SOCAN) v. Bell Canada 2012 SCC 36,the Court considered whether the ’30-second preview’ that Bell provides,(of the type featured on iTunes), is exempt from the SOCAN tariff on the grounds of ‘fair dealing’ for the purposes of research (SRP 1); (SOCAN collects royalties for Canadian and International music creators and publishers). Bell Canada, Apple and others that sell digital reproductions of musical works, enable customers to listen to a preview of the work before making a decision to purchase. The SCC decision turned on three key findings of the Court:
1) When a Bell customer plays preview clips to enable selection of musical works for purchase, the customer is conducting private research that falls within the scope of the ‘research’ exemption;
2) Bell’s undeniable commercial purpose in streaming previews of the copyrighted musical works does not disqualify the reproduction from being characterized as ‘research’;
3) Streaming an excerpt of a musical work to a customer in a manner in which the reproduction is only temporary (it is not downloadable, and it isautomatically deleted after play), constitutes dealing in a form and to an extent that is fair, vis-à-vis the copyright owner.
What Constitutes Research
The Supreme Court ruled that “researching” a purchase constitutes eligible exempted ‘research’. The Court held that the term ‘research’ should be given a broad liberal interpretation whereby ‘research’ does not require ‘a systematic study of multiple sources to derive facts and reach new conclusions’, as SOCAN contended.
Reproduction for Profit
Furthermore, the Court concluded that it is the ultimate user’s (in this case, the consumer) perspective that is generally decisive as to whether an activity will be considered to constitute ‘research’ – notwithstanding the service provider’s (i.e. Bell) non-research profit agenda for reproducing the work (to sell music downloads). In the instant case, it was the consumer’s research purpose for reproducing the work so as to consider purchase of the work,which dominated whether the impugned activity was legitimately qualified as exempted research.
Application of Fairness Factors
In CCH Canadian v Law Society of Upper Canada, the Supreme Court of Canada identified six key factors which should be weighed in determining whether an activity that falls within one of the categories of exemption, satisfies the criterion of striking a fair balance between the rights of the public, and those of the copyright owner. Based on the application of these factors, the Supreme Court, in the instant case, concluded that streaming of previews is fair dealing:
Purpose: An objective assessment needs to be made of the real motive behind the use of the work. Here, Bell is facilitating the research purposes of the consumer.
Amount: It is not the aggregate amount of the dealing (i.e. the number of previews) that is of concern, but rather the proportion of the work that is reproduced. A short preview is a modest amount of the work in relation to the whole.
Character: As opposed to the service provider making multiple subsisting copies of the work, here the ‘character’ of the use is that a single copy of the work is being reproduced repeatedly and automatically deleted afterwards
Alternative: There are no comparably practical and economical alternatives for enabling the consumer to sample the work before buying.
Nature of Work: Consideration of the nature of the work involves examining whether the work is one that should be widely disseminated. The fact that the work is widely available through other sources does not necessarily correlate with whether it is widely disseminated. The consumer must be able to locate and identify a work – otherwise the work will not be disseminated.
Effect: The preview is merely a lower quality excerpt of the work and therefore does not adversely affect the degree to which the work is downloaded, on a paid basis.
In Province of Alberta v. Canadian Copyright Licensing Agency, the Supreme Court reviewed a Copyright Board decision based on a standard of “reasonableness”. It ruled that the Board needs to reconsider its ‘unreasonable’ determination – that the photocopying by teachers of excerpts of textbooks for use by students in classrooms is not fair dealing. The Supreme Court found that the Board misapplied the CCH factors, as explained below:
With respect to purpose, the Court acknowledged that a disseminator’s ulterior commercial purpose may often be hidden behind the ultimate user’s allowable purpose, and that this is not to be overlooked in assessing fairness. Nevertheless, the Court found that when teachers photocopy excerpts of textbooks for classroom use by students, they do legitimately facilitate ‘private study’, as study in a classroom setting qualifies as private study, and does not require study by a student in isolation.
In line with its decision in SOCAN v. Bell Canada, the Supreme Court emphasized that what is material is the amount of a work that is reproduced in a copying activity, in relation to the whole.The Court discounted considerations of the aggregate proportion of a work copied over a period of time.
The Court also held that the Board erred in considering the amount of the dealing as a factor in assessing the character of the dealing.
The Court also ruled that purchasing textbooks for each student was not a realistic alternative to photocopying excerpts from the stand point of facilitating students’ private study.
In terms of effect of the dealing, the Court found that there was no evidence of a link between declining textbook sales and the copying of short excerpts of textbooks.
As a consequence of its findings, the Supreme Court remanded the case back to the Copyright Board for reconsideration based on a proper application of the CCH factors.
Accordingly, recent legislative and judicial developments inCanadain the area of fair dealing have considerably eroded the rights of copyright owners.
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Bill Herman, M.Sc., LL.B., is senior counsel in GNSH’s Intellectual Property practice group. He can be reached in Torontoat 416-597-6487 or at herman@gsnh.com.