Society of Composers, Authors and Music Publishers of Canada v. Canadian Assn. of Internet Providers | Ariel Katz Research Assistant | June 21, 2016

H2O

This is the old version of the H2O platform and is now read-only. This means you can view content but cannot create content. You can access the new platform at https://opencasebook.org. Thank you.

Society of Composers, Authors and Music Publishers of Canada v. Canadian Assn. of Internet Providers

by Ariel Katz Research Assistant
1

2004 SCC 45, 2004 CSC 45

Supreme Court of Canada

Society of Composers, Authors & Music Publishers of Canada v. Canadian Assn. of Internet Providers

Canadian Association of Internet Providers, Canadian Cable Television Association, Bell Express Vu, Telus Communications Inc., Bell Canada, Aliant Inc. and MTS Communications Inc., Appellants/Respondents on cross-appeal v. Society of Composers, Authors and Music Publishers of Canada, Respondent/Appellant on cross-appeal and Internet Commerce Coalition, European Telecommunications Network Operators’ Association, European Internet Service Providers’ Association, Australian Internet Industry Association, Telecom Services Association, U.S. Internet Industry Association, Canadian Recording Industry Association and International Federation of Phonogram Industry, Interveners

Arbour J., Bastarache J., Binnie J., Deschamps J., Fish J., Iacobucci J., LeBel J., Major J., McLachlin C.J.C.

Heard: December 3, 2003

Judgment: June 30, 2004

Docket: 29286

2

Counsel: Thomas G. Heintzman, Q.C., Barry B. Sookman, for Appellants/Respondents on cross-appeal

3

Y.A. George Hynna, Brian A. Crane, Q.C., Gilles M. Daigle, C. Paul Spurgeon, for Respondent/Appellant on cross-appeal

4

Andrea Rush, Stephen Zolf, for Interveners, Internet Commerce Coalition, European Telecommunications Network Operators’ Association, European Internet Service Providers’ Association, Australian Internet Industry Association, Telecom Services Association, U.S. Internet Industry Association

5

Glen A. Bloom, for Interveners, Canadian Recording Industry Association, International Federation of Phonogram Industry

6

Headnote

7

Intellectual property --- Copyright — Infringement of owner’s rights — Direct infringement — Telecommunications

8

”Real and substantial connection test” applies to locating infringing activity — Location of host server is not sole factor in identifying whether communication by telecommunication occurs in Canada.

9

International Law --- Application of domestic law — Of Canadian law outside Canada — General

10

In absence of clear words to contrary, Parliament did not intend its legislation to receive extraterritorial application — Copyright law respects territorial principles — “Real and substantial connection” to Canada will support application of our Copyright Act to international internet transmission in way that will accord with international comity and be consistent with objectives of order and fairness.

11

Intellectual property --- Copyright — Copyright Board — Judicial review of decisions

12

”Correctness” is standard of review of Copyright Board decisions on legal questions in issue — Copyright Act is one of general application usually dealt with before court rather than tribunals — Challenge was not to board’s view of facts but to legal significance of facts.

13

Propriété intellectuelle --- Droit d’auteur — Violation des droits du titulaire — Violation directe — Télécommunications

14

Critère du « lien réel et important » s’applique pour trouver l’endroit où a lieu l’activité qui viole le droit d’auteur — Lieu où est situé le serveur hôte ne constitue pas le seul facteur dont il faut tenir compte pour déterminer si la communication par télécommunication a lieu au Canada.

15

Droit international --- Application du droit interne — Du droit canadien à l’extérieur du Canada — En général

16

En l’absence de termes clairs exprimant le contraire, on ne pouvait dire que le Parlement ne voulait pas que sa législation ait une portée extraterritoriale — Droit en matière de droit d’auteur respecte les principes territoriaux — « Lien réel et important » avec le Canada soutiendra l’application de notre Loi sur le droit d’auteur aux transmissions internationales sur Internet d’une manière respectant le principe de la courtoisie internationale et compatible avec les objectifs de l’ordre et de l’équité.

17

Propriété intellectuelle --- Droit d’auteur — Commission du droit d’auteur — Contrôle judiciaire des décisions

18

Norme de contrôle applicable aux décisions de la Commission du droit d’auteur en ce qui concernait les questions en litige était celle de la « décision correcte » — Loi sur le droit d’auteur est une loi de portée générale dont l’application relève habituellement des cours de justice, et non des tribunaux administratifs — Contestation ne portait pas sur l’appréciation des faits par la Commission, mais plutôt sur leur portée juridique.

19

Socan is a collective society that administers in Canada the performing and communication rights of its members and foreign composers, authors, and publishers. In 1995, it proposed “Tariff 22”, the first tariff of royalties payable in respect of music transmitted on the internet. The tariff was filed with the Copyright Board. The board determined which activities of internet entities infringed copyright under s. 3(1)(f) of the Copyright Act and made them potentially liable to pay a royalty, and which activities were excluded from the definition of “communication” by s. 2.4(1)(b) of the Act.

20

The board ruled that entities subject to a royalty include those posting music on a server located in Canada to which internet users have access, but not those whose only role is to operate a server on which music is stored or to provide a recipient with internet access. The normal activities of internet intermediaries not acting as content providers are not a “communication” and do not infringe copyright. An internet communication occurs when the work is transmitted from the host server to the computer of the end user. An internet communication is made “to the public” because the music files are openly made available on the internet. A communication may be to the public when it is made to individual members of the public at different times. Section 2.4(1)(b) of the Act protects ancillary services furnished by an internet service provider to a content provider or end user if those services are not a “communication” or an “authorization to communicate” the work.

21

The board also held that the transmission of music from a cache or mirror site is not a “communication.” An entity which makes other pages or websites automatically accessible to an end user by way of an embedded hyperlink “authorizes” the communication of the material available on those sites. Knowledge by an internet service provider that its facilities might be used for infringing purposes is not enough to incur liability. The internet service provider need only grant the person committing the infringement a licence or permission to infringe. An internet communication occurs in Canada only if it originates from a server in Canada. A content provider is subject to a royalty only if the content is posted on a server located in Canada.

22

Socan’s application for judicial review was granted in part. Socan is only entitled to a royalty for copyright infringement occurring in Canada. The test was not the “host server location test” but the “real and substantial connection test.” A royalty may be made payable in Canada for communications by telecommunication having a “real and substantial connection” with Canada. Internet service providers performing a purely intermediary function are not liable for copyright infringement. An internet service provider creating a cache of internet material is a communicator and a participant in the copyright infringement. The dissenting judge was of the view that the board correctly concluded that to cache for the purpose of enhancing internet economy and efficiency is not infringement.

23

The internet providers appealed and Socan cross-appealed.

24

Held: The appeal was allowed in part; the cross-appeal was dismissed.

25

Per Binnie J. (McLachlin C.J.C. and Iacobucci, Major, Bastarache, Arbour, Deschamps and Fish JJ. concurring): The issue is who should compensate musical composers and artists for their Canadian copyright in music downloaded in Canada from a foreign country by way of the internet. The use of the internet should be facilitated but not unfairly at the expense of creators.

26

”Correctness” is the standard of review of Copyright Board decisions. There is no preclusive clause or statutory right to appeal from Copyright Board decisions. The board chair must be a current or retired judge but the board may hold a hearing without any legally trained member present. The Act is one of general application which usually is dealt with before courts rather than tribunals. The questions on appeal were legal questions. The challenge was not to the board’s view of the facts but to the legal significance of the facts.

27

A “telecommunication” occurs when music is transmitted from the host server to the end user. An internet communication crossing one or more national boundaries occurs in more than one country. To occur in Canada, a communication need not originate from a server located in Canada. The board erred in concluding that a communication not originating in Canada cannot be said to occur in Canada.

28

The board erred in holding that the only relevant connection between Canada and the communication is the location of the host server. As a matter of international law, practice, and legislative reach of Parliament, the jurisdiction of Canada is not so limited. The relevant connecting factors include the situs of the content provider, the host server, the intermediary, and the end user. To conclude that Canada could exercise copyright jurisdiction in respect to transmissions originating in Canada and transmissions originating abroad but received in Canada is consistent with our general law and with national and international copyright practice. A “real and substantial connection” to Canada is sufficient to apply the Copyright Act to international internet transmissions.

29

Whether Canada intended to exercise its copyright jurisdiction to impose liability on every participant in an internet communication with a “real and substantial connection” with Canada is a different matter involving statutory interpretation.

30

Section 2.4(1)(b) of the Act provides that persons who only supply “the means of telecommunication necessary for another person to so communicate” are not to be considered parties to an infringing communication. “Necessary” refers to means that are reasonably useful and proper to achieve the benefits of enhanced economy and efficiency. “The means” includes all software connection equipment, connectivity services, hosting and other facilities and services without which such communication would not occur. The 1988 amendment to the Act confirms that internet intermediaries have immunity and are not to be considered parties to the infringing communication. As long as an internet intermediary does not itself engage in acts relating to the content of the communication, but merely provides “a conduit” for information provided by others, it is protected. The characteristics of a conduit include a lack of actual knowledge of the infringing contents, and the impracticality of monitoring the vast amount of material moving through the internet.

31

The knowledge of an internet service provider that someone might be using content-neutral technology to violate copyright is not necessarily sufficient to constitute authorization which requires a demonstration that the defendant did give approval to, sanction, permit, favour, or encourage the infringing conduct. Authorization can be inferred.

32

The creation of a cache copy is a serendipitous consequence of improvements in internet technology. Caching is dictated by the need to deliver faster and more economic service. When used only for such technical reasons, it should be protected by s. 2.4(1)(b) of the Act.

33

By enacting s. 2.4(1)(b) of the Act, Parliament made a policy distinction between those who use the internet to supply or obtain “cheap music” and those who are part of the infrastructure of the internet itself. It determined that there is a public interest in encouraging intermediaries that make telecommunications possible to expand and improve their operations without the threat of copyright infringement.

34

Per LeBel J. (dissenting in part): The “host server test” is the preferable test for interpreting the meaning of “communicate” in s. 3(1)(f) of the Act. The test clearly complies with the territoriality requirements of international copyright law, and harmonizes Canadian copyright law with international treaty principles. It diminishes privacy concerns. It is sound operationally and provides the predictability and best accords with the meaning and purpose of the Act.

35

The “real and substantial connection test” was developed in a very different context and is inappropriate for determining whether a communication occurs in Canada. It is not a principle of legislative jurisdiction. It is inconsistent with the territoriality principle. It could result in a layering of royalty obligations between states and it raises privacy concerns. It would encourage the monitoring of an individual’s surfing and downloading activities and the collection of personal data gleaned from internet-related activity. Once the content provider has posted content on a host server, the content is available to the public. Owners of copyrighted works and their collective societies can easily monitor public content by trawling publicly accessible servers with specially designed software.

36

There is a common law presumption that Parliament does not intend legislation to apply extraterritorially and that it does not legislate in breach of a treaty, the comity of nations, and the principles of international law. The presumption is rebuttable where the contrary intention is expressly stated or implied by legislation. Neither s. 3(1)(f) nor any other related provision of the Act expressly or impliedly states that it applies beyond Canada’s territorial limits. For the purpose of s. 3(1)(f), a communication occurs within Canada where it originates from a host server located in Canada. The copyright works physically exist within Canadian territory and attract the protection of s. 3(1)(f) of the Act.

37

La SOCAN est une société qui gère les droits d’exécution et de communication de ses membres ainsi que ceux des compositeurs, auteurs et éditeurs de musique étrangers. En 1995, elle a proposé le « Tarif 22 », qui constituait le premier tarif exigeant le paiement de redevances pour la transmission de musique sur Internet. Le tarif a été déposé devant la Commission du droit d’auteur. Celle-ci a déterminé quelles étaient les activités d’entités existant sur l’Internet qui violaient le droit d’auteur en vertu de l’art. 3(1)f) de la Loi sur le droit d’auteur et a déclaré que les entités pourraient potentiellement avoir à payer des redevances; elle a aussi déterminé quelles activités étaient exclues de la définition de « communication » par l’art. 2.4(1)b) de la Loi.

38

La Commission a statué que faisaient partie des fournisseurs assujettis au versement de redevances ceux qui rendaient des oeuvres musicales disponibles sur un serveur situé au Canada auquel d’autres utilisateurs de l’Internet ont accès, mais non ceux ayant comme seul rôle d’opérer un serveur sur lequel on entreposait de la musique ou qui fournissaient à une personne l’accès à l’Internet. Les activités normales des intermédiaires sur l’Internet qui n’agissent pas comme fournisseurs de contenu ne constituent pas une « communication » et, donc, ne violent pas le droit d’auteur. Il y a une communication Internet lorsque l’oeuvre est transmise du serveur hôte à l’ordinateur de l’utilisateur final. Il y a une communication Internet « au public » parce que les fichiers musicaux sont rendus disponibles sur l’Internet de manière ouverte. Il peut s’agir d’une communication au public lorsqu’elle est faite à des membres individuels du public à des moments différents. L’article 2.4(1)b) de la Loi protège les services accessoires qui sont fournis par un fournisseur de services Internet à un fournisseur de contenu ou à un utilisateur final seulement si ces services ne constituent pas une « communication » ou une « autorisation de communiquer » une oeuvre.

39

La Commission a également statué que la transmission de musique à partir d’un antémémoire ou d’un site miroir ne constitue pas une « communication ». Une entité qui rend automatiquement accessibles à un utilisateur final d’autres pages ou sites Web à l’aide d’un hyperlien intégré « autorise » la communication du contenu disponible sur ces sites. Le fait qu’un fournisseur de services Internet sache que ses installations pourraient servir à des fins illicites ne suffit pas à engager sa responsabilité. Le fournisseur de services Internet doit accorder à l’auteur de l’atteinte une licence ou une permission d’agir illégalement. Une communication Internet n’a lieu au Canada que lorsqu’elle provient d’un serveur situé au Canada. Un fournisseur de contenu ne doit verser une redevance que s’il rend du contenu disponible sur un serveur situé au Canada.

40

La demande de contrôle judiciaire de la SOCAN a été accueillie en partie. La SOCAN n’a le droit de recevoir des redevances que lorsque la violation a lieu au Canada. Le critère applicable était celui du « lien réel et important », et non celui de « l’emplacement du serveur hôte ». Une redevance peut être exigible au Canada lorsque les communications par télécommunication ont un « lien réel et important » avec le Canada. Les fournisseurs de services Internet qui n’agissent qu’à titre intermédiaire ne sont pas responsables de violation du droit d’auteur. Un fournisseur de services Internet qui crée un antémémoire de contenu Internet fait de la communication et participe à la violation du droit d’auteur. La juge dissidente était d’avis que la Commission avait conclu correctement que l’utilisation d’un antémémoire afin d’accélérer la transmission et de réduire les coûts d’accès à l’Internet ne constituait pas une violation.

41

Les fournisseurs Internet ont interjeté appel et la SOCAN a présenté un pourvoi incident.

42

Arrêt: Le pourvoi a été accueilli en partie; le pourvoi incident a été rejeté.

43

Binnie, J. (McLachlin, J.C.C., Iacobucci, Major, Bastarache, Arbour, Deschamps et Fish, J.J., souscrivant à l’opinion de Binnie, J.): La question en litige était celle de savoir qui doit verser des redevances aux artistes et aux compositeurs titulaires du droit d’auteur canadien sur les oeuvres musicales téléchargées au Canada à partir d’un autre pays, au moyen de l’Internet. L’utilisation de l’Internet doit certes être facilitée, mais pas de façon injuste ou aux dépens des créateurs.

44

La norme de la « décision correcte » était la norme de contrôle applicable aux décisions de la Commission du droit d’auteur. La Loi ne contient aucune clause privative ou droit d’appel à l’encontre des décisions de la Commission du droit d’auteur. Le président de la Commission doit être un juge en poste ou à la retraite; la Commission peut cependant tenir une audience en l’absence de tout membre ayant une formation juridique. La Loi est une loi de portée générale dont l’application relève habituellement des cours de justice, et non des tribunaux administratifs. Les questions faisant l’objet du pourvoi étaient des questions de droit. On ne contestait pas l’appréciation des faits par la Commission, mais plutôt leur portée juridique.

45

Il y a « télécommunication » lorsque de la musique est transmise d’un serveur hôte à un utilisateur final. Une communication Internet qui traverse une ou plusieurs frontières nationales a lieu dans plus d’un seul pays. Il n’est pas nécessaire que la communication provienne d’un serveur situé au Canada pour qu’elle ait lieu au Canada. La Commission a commis une erreur en concluant que l’on ne pouvait dire qu’une communication avait lieu au Canada si elle ne provenait pas du Canada.

46

La Commission a commis une erreur en statuant que l’emplacement du serveur hôte est le seul facteur de rattachement pertinent entre le Canada et la communication. Au regard du droit international et de la pratique y afférente, ainsi que de la portée des lois du Parlement, la compétence du Canada n’est pas aussi restreinte. Les facteurs de rattachement pertinents englobent le lieu où se trouvent le fournisseur de contenu, le serveur hôte, l’intermédiaire ainsi que l’utilisateur final. La conclusion selon laquelle le Canada pourrait exercer sa compétence en matière de droits d’auteur à l’égard tant des transmissions effectuées au pays que de celles provenant de l’étranger est conforme non seulement à notre droit général, mais aussi aux pratiques nationales et internationales en la matière. La présence d’un « lien réel et important » avec le Canada suffit pour appliquer la Loi sur le droit d’auteur aux transmissions internationales sur Internet.

47

La question de savoir si le Canada voulait exercer sa compétence en matière de droit d’auteur pour rendre responsable chaque participant à une communication Internet qui a un « lien réel et important » avec le Canada constitue une question différente qui nécessite l’interprétation des dispositions législatives.

48

L’article 2.4(1)b) de la Loi prévoit que les personnes qui ne font que fournir « à un tiers les moyens de télécommunication nécessaires pour que celui-ci l’effectue » ne sont pas considérées comme participant à une communication violant le droit d’auteur. Le terme « nécessaire » fait référence aux moyens qui sont raisonnablement utiles et appropriés pour l’obtention des avantages que sont une économie et une efficacité accrues. « [L]es moyens » englobent tous les logiciels de connexion, les services assurant la connectivité, les installations et services offrant l’hébergement sans lesquels la communication n’aurait pas lieu. La modification apportée à la Loi, en 1988, confirme que les intermédiaires Internet bénéficient de l’immunité et qu’ils ne sont pas considérés comme participant à la communication qui viole le droit d’auteur. L’intermédiaire Internet est protégé tant qu’il ne se livre pas à une activité touchant au contenu de la communication, et qu’il se contente d’être « un agent » permettant à autrui de communiquer. L’agent se caractérise par son ignorance du contenu attentatoire et l’impossibilité qu’il a de surveiller la quantité énorme de fichiers circulant sur l’Internet.

49

Le fait qu’un fournisseur de services Internet puisse savoir que quelqu’un pourrait violer le droit d’auteur grâce à une technologie sans incidence sur le contenu n’équivaut pas nécessairement à autoriser cette violation, car il faut démontrer que l’intéressé a approuvé, sanctionné, permis, favorisé, encouragé le comportement illicite. L’autorisation peut se déduire.

50

L’« antémémoire » est une belle invention issue du progrès de la technologie Internet. La « mise en antémémoire » est dictée par la nécessité d’offrir un service plus rapide et plus économique. Lorsqu’elle n’est utilisée que pour de telles raisons techniques, elle devrait être protégée par l’art. 2.4(1)b) de la Loi.

51

En adoptant l’art. 2.4(1)b) de la Loi, le Parlement a fait une distinction de principe entre ceux qui utilisent l’Internet pour se procurer de la musique à peu de frais et ceux qui font partie de l’infrastructure d’Internet comme telle. Le Parlement a conclu qu’il est dans l’intérêt du public d’encourager les intermédiaires, qui rendent les télécommunications possibles, à étendre et à développer leurs activités sans s’exposer au risque de violer le droit d’auteur.

52

LeBel, J. (dissident en partie): Le critère le plus approprié pour interpréter le terme « communication » utilisé dans l’art. 3(1)f) de la Loi est celui du « serveur hôte ». Ce critère est parfaitement conforme au principe de territorialité du droit d’auteur international; il harmonise le droit d’auteur canadien avec les principes formulés dans les traités internationaux. Il réduit le risque d’atteinte à la vie privée. Il est valable sur le plan pratique, il offre la prévisibilité voulue, et il demeure le plus compatible avec la portée et l’objet de la Loi.

53

Le « critère du lien réel et important » a été développé dans un contexte beaucoup plus différent et il n’est pas approprié pour déterminer si une communication a lieu au Canada. Il ne constitue pas un principe de compétence législative. Il n’est pas conforme au principe de territorialité. Il pourrait donner lieu à la superposition des redevances exigibles dans les différents États et soulève des craintes en ce qui concerne la vie privée. Il favoriserait le contrôle des activités individuelles de téléchargement et de navigation sur le Net ainsi que la collecte de données personnelles lors d’une utilisation de l’Internet. Dès que le fournisseur de contenu a rendu accessible du contenu sur un serveur hôte, le contenu devient accessible au public. Les titulaires de droits d’auteur et les sociétés de gestion peuvent aisément surveiller le contenu public en balayant les serveurs accessibles au public à l’aide de logiciels spéciaux.

54

Il existe, en common law, une présomption que le Parlement n’a pas l’intention de conférer à une loi une portée extraterritoriale et qu’il légifère sans porter atteinte à un traité, à la courtoisie entre les États ou aux principes du droit international. La présomption peut être réfutée par l’intention contraire exprimée expressément ou implicitement dans la loi. Ni l’art. 3(1)f) ni aucune autre disposition connexe n’indiquent expressément ou implicitement que la Loi s’applique au-delà des limites territoriales du Canada. Pour l’application de l’art. 3(1)f), une communication a lieu au Canada lorsqu’elle provient d’un serveur hôte situé au Canada. Les oeuvres protégées par le droit d’auteur existent physiquement sur le territoire canadien et bénéficient de la protection de l’art. 3(1)f) de la Loi.

55

Table of Authorities

56

Cases considered by Binnie J.:

57

A & M Records, Inc. v. Napster, Inc. (2000), 114 F.Supp.2d 896, 55 U.S.P.Q.2d 1780 (U.S. N.D. Cal.) — referred to

58

A & M Records, Inc. v. Napster, Inc. (2000), 239 F.3d 1004 (U.S. C.A. 9th Cir.) — referred to

59

Apple Computer Inc. v. Mackintosh Computers Ltd. (1986), 8 C.I.P.R. 153, 10 C.P.R. (3d) 1, 3 F.T.R. 118, 28 D.L.R. (4th) 178, 1986 CarswellNat 606, 1986 CarswellNat 705, [1987] 1 F.C. 173 (Fed. T.D.) — considered

60

Apple Computer Inc. v. Mackintosh Computers Ltd. (1990), 110 N.R. 66, [1990] 2 S.C.R. 209, 71 D.L.R. (4th) 95, 30 C.P.R. (3d) 257, 1990 CarswellNat 736, 1990 CarswellNat 1027, 36 F.T.R. 159 (note) (S.C.C.) — referred to

61

Beals v. Saldanha (2003), 2003 SCC 72, 2003 CarswellOnt 5101, 2003 CarswellOnt 5102, 39 B.L.R. (3d) 1, 39 C.P.C. (5th) 1, 234 D.L.R. (4th) 1, [2003] 3 S.C.R. 416, 314 N.R. 209, 182 O.A.C. 201 (S.C.C.) — referred to

62

Bell ExpressVu Ltd. Partnership v. Rex (2002), 2002 SCC 42, 2002 CarswellBC 851, 2002 CarswellBC 852, 100 B.C.L.R. (3d) 1, [2002] 5 W.W.R. 1, 212 D.L.R. (4th) 1, 287 N.R. 248, 18 C.P.R. (4th) 289, 166 B.C.A.C. 1, 271 W.A.C. 1, 93 C.R.R. (2d) 189, [2002] 2 S.C.R. 559 (S.C.C.) — referred to

63

Bishop v. Stevens (1990), 72 D.L.R. (4th) 97, [1990] 2 S.C.R. 467, 31 C.P.R. (3d) 394, 111 N.R. 376, 1990 CarswellNat 738, 1990 CarswellNat 1028 (S.C.C.) — referred to

64

Braintech Inc. v. Kostiuk (1999), 1999 CarswellBC 546, 171 D.L.R. (4th) 46, 63 B.C.L.R. (3d) 156, [1999] 9 W.W.R. 133, 120 B.C.A.C. 1, 196 W.A.C. 1 (B.C. C.A.) — considered

65

C.B.S. Inc. v. Ames Records & Tapes (1981), [1981] 2 All E.R. 812, [1981] R.P.C. 407, [1981] 2 W.L.R. 973, 125 Sol. Jo. 412, [1982] Ch. 91 (Eng. Ch. Div.) — considered

66

Canada (Human Rights Commission) v. Canadian Liberty Net (1998), 157 D.L.R. (4th) 385, 1998 CarswellNat 387, 1998 CarswellNat 388, 224 N.R. 241, 50 C.R.R. (2d) 189, [1998] 1 S.C.R. 626, 31 C.H.R.R. D/433, 147 F.T.R. 305 (note), 6 Admin. L.R. (3d) 1, 22 C.P.C. (4th) 1 (S.C.C.) — considered

67

Canadian Assn. of Broadcasters v. Society of Composers, Authors & Music Publishers of Canada (1994), 58 C.P.R. (3d) 190, 175 N.R. 341, 1994 CarswellNat 1846 (Fed. C.A.) — followed

68

CCH Canadian Ltd. v. Law Society of Upper Canada (2004), 236 D.L.R. (4th) 395, 317 N.R. 107, 30 C.P.R. (4th) 1, [2004] 1 S.C.R. 339, 2004 SCC 13, 2004 CarswellNat 446, 2004 CarswellNat 447 (S.C.C.) — considered

69

Citron v. Zündel (2002), 41 C.H.R.R. D/274, 2002 CarswellNat 4364 (Can. Human Rights Trib.) — considered

70

Compo Co. v. Blue Crest Music Inc. (1979), [1980] 1 S.C.R. 357, 45 C.P.R. (2d) 1, 105 D.L.R. (3d) 249, (sub nom. Blue Crest Music Inc. v. Compo Co.) 29 N.R. 296, 1979 CarswellNat 640, 1979 CarswellNat 640F (S.C.C.) — referred to

71

Dow Jones & Co. v. Gutnick (2002), 210 C.L.R. 575, 77 A.L.J.R. 255, 194 A.L.R. 433, [2002] H.C.A. 56 (Australia H.C.) — considered

72

Earth Future Lottery, Re (2003), 2003 CarswellPEI 25, 2003 CarswellPEI 26, (sub nom. Earth Future Lottery & Criminal Code s. 207, Re) 171 C.C.C. (3d) 225, (sub nom. Earth Future Lottery & Criminal Code s. 207, Re) 222 D.L.R. (4th) 383, 2003 SCC 10, (sub nom. Reference re Earth Future Lottery) [2003] 1 S.C.R. 123, 301 N.R. 198, 223 Nfld. & P.E.I.R. 358, 666 A.P.R. 358 (S.C.C.) — considered

73

Electric Despatch Co. v. Bell Telephone Co. (1891), 20 S.C.R. 83, 1891 CarswellOnt 21 (S.C.C.) — referred to

74

Galerie d’art du Petit Champlain inc. c. Théberge (2002), 2002 SCC 34, 2002 CarswellQue 306, 2002 CarswellQue 307, (sub nom. Théberge v. Galerie d’Art du Petit Champlain inc.) 17 C.P.R. (4th) 161, (sub nom. Théberge v. Galerie d’Art du Petit Champlain inc.) 210 D.L.R. (4th) 385, 23 B.L.R. (3d) 1, (sub nom. Théberge v. Galerie d’art du Petit Champlain inc.) 285 N.R. 267, [2002] 2 S.C.R. 336 (S.C.C.) — considered

75

Godfrey v. Demon Internet Ltd. (1999), [1999] 4 All E.R. 342 (Eng. Q.B.) — referred to

76

Holt Cargo Systems Inc. v. ABC Containerline N.V. (Trustees of) (2001), 2001 SCC 90, 2001 CarswellNat 2816, 2001 CarswellNat 2817, 30 C.B.R. (4th) 6, 207 D.L.R. (4th) 577, 280 N.R. 1, [2001] 3 S.C.R. 907 (S.C.C.) — referred to

77

Hunt v. T & N plc (1993), [1994] 1 W.W.R. 129, 21 C.P.C. (3d) 269, (sub nom. Hunt v. Lac d’Amiante du Québec Ltée) 37 B.C.A.C. 161, (sub nom. Hunt v. Lac d’Amiante du Québec Ltée) 60 W.A.C. 161, (sub nom. Hunt v. T&N plc) 109 D.L.R. (4th) 16, 85 B.C.L.R. (2d) 1, (sub nom. Hunt v. Lac d’Amiante du Québec Ltée) 161 N.R. 81, (sub nom. Hunt v. T&N plc) [1993] 4 S.C.R. 289, 1993 CarswellBC 1271, 1993 CarswellBC 294 (S.C.C.) — referred to

78

Kitakufe v. Oloya (1998), 1998 CarswellOnt 2494 (Ont. Gen. Div.) — referred to

79

Los Angeles News Service v. Conus Communications Co. (1997), 969 F. Supp. 579 (U.S. C.D. Cal.) — considered

80

Menear v. Miguna (1996), 32 C.C.L.T. (2d) 35, 30 O.R. (3d) 602, 15 O.T.C. 64, 1996 CarswellOnt 4043 (Ont. Gen. Div.) — referred to

81

Menear v. Miguna (1997), 100 O.A.C. 238, 33 O.R. (3d) 223, 1997 CarswellOnt 1821 (Ont. C.A.) — referred to

82

Morguard Investments Ltd. v. De Savoye (1990), 46 C.P.C. (2d) 1, 15 R.P.R. (2d) 1, 76 D.L.R. (4th) 256, 122 N.R. 81, [1991] 2 W.W.R. 217, 52 B.C.L.R. (2d) 160, [1990] 3 S.C.R. 1077, 1990 CarswellBC 283, 1990 CarswellBC 767 (S.C.C.) — considered

83

Muzak Corp. v. Composers, Authors & Publishers Assn. (Canada) (1953), [1953] 2 S.C.R. 182, 13 Fox Pat. C. 168, 19 C.P.R. 1, 1953 CarswellQue 18 (S.C.C.) — referred to

84

N.F.L. v. PrimeTime 24 Joint Venture (2000), 211 F.3d 10 (U.S. 2nd Cir.) — considered

85

N.F.L. v. TVRadioNow Corp. (2000), 53 U.S.P.Q.2d 1831 (U.S. W.D. Pa.) — considered

86

Newton v. Vancouver (City) (1932), 46 B.C.R. 67, 1932 CarswellBC 126 (B.C. S.C.) — referred to

87

Q. v. College of Physicians & Surgeons (British Columbia) (2003), (sub nom. Dr. Q. v. College of Physicians & Surgeons of British Columbia) [2003] 1 S.C.R. 226, 2003 SCC 19, 2003 CarswellBC 713, 2003 CarswellBC 743, 11 B.C.L.R. (4th) 1, [2003] 5 W.W.R. 1, 223 D.L.R. (4th) 599, 48 Admin. L.R. (3d) 1, (sub nom. Dr. Q., Re) 302 N.R. 34, (sub nom. Dr. Q., Re) 179 B.C.A.C. 170, (sub nom. Dr. Q., Re) 295 W.A.C. 170 (S.C.C.) — considered

88

R. v. Cremascoli (1979), (sub nom. R. v. Goldman) [1980] 1 S.C.R. 976, 30 N.R. 453, 13 C.R. (3d) 228 (Eng.), 16 C.R. (3d) 330 (Fr.), 51 C.C.C. (2d) 1, 108 D.L.R. (3d) 17, 1979 CarswellOnt 699, 1979 CarswellOnt 63 (S.C.C.) — referred to

89

R. v. Libman (1985), [1985] 2 S.C.R. 178, 62 N.R. 161, 21 C.C.C. (3d) 206, 12 O.A.C. 33, (sub nom. Libman v. R.) 21 D.L.R. (4th) 174, 1985 CarswellOnt 951, 1985 CarswellOnt 951F (S.C.C.) — followed

90

Religious Technology Center v. Netcom On-Line Communication Services (1995), 907 F. Supp. 1361, 37 U.S.P.Q.2d 1545, 24 Media L. Rep. 1097 (U.S. N.D. Cal.) — considered

91

Spar Aerospace Ltd. v. American Mobile Satellite Corp. (2002), [2002] 4 S.C.R. 205, 220 D.L.R. (4th) 54, 297 N.R. 83, 2002 SCC 78, 2002 CarswellQue 2593, 2002 CarswellQue 2594, 28 C.P.C. (5th) 201 (S.C.C.) — referred to

92

Sun Life Assurance Co. of Canada v. W. H. Smith & Son, Ltd. (1933), [1933] All E.R. 432 (Eng. C.A.) — referred to

93

Tolofson v. Jensen (1994), [1995] 1 W.W.R. 609, 22 C.C.L.T. (2d) 173, 100 B.C.L.R. (2d) 1, 32 C.P.C. (3d) 141, 7 M.V.R. (3d) 202, 26 C.C.L.I. (2d) 1, 175 N.R. 161, 120 D.L.R. (4th) 289, (sub nom. Lucas (Litigation Guardian of) v. Gagnon) [1994] 3 S.C.R. 1022, 77 O.A.C. 81, 51 B.C.A.C. 241, 84 W.A.C. 241, 1994 CarswellBC 1, 1994 CarswellBC 2578 (S.C.C.) — considered

94

Unifund Assurance Co. of Canada v. Insurance Corp. of British Columbia (2003), 1 C.C.L.I. (4th) 1, 306 N.R. 201, 176 O.A.C. 1, (sub nom. Unifund Assurance Co. v. Insurance Corporation of British Columbia) [2003] I.L.R. I-4209, [2003] R.R.A. 739, [2003] 2 S.C.R. 63, 227 D.L.R. (4th) 402, 16 B.C.L.R. (4th) 1, [2003] 9 W.W.R. 1, 2003 SCC 40, 2003 CarswellOnt 2771, 2003 CarswellOnt 2772 (S.C.C.) — referred to

95

Vigneux v. Canadian Performing Right Society (1945), 4 Fox Pat. C. 183, [1945] A.C. 108, [1945] 1 All E.R. 432, 4 C.P.R. 65, [1945] 2 D.L.R. 1, 1945 CarswellNat 3 (Canada P.C.) — referred to

96

WIC Premium Television Ltd. v. General Instrument Corp. (2000), 2000 CarswellAlta 878, 2000 ABCA 233, 8 C.P.R. (4th) 1, 266 A.R. 142, 228 W.A.C. 142, [2001] 2 W.W.R. 431, 86 Alta. L.R. (3d) 184 (Alta. C.A.) — referred to

97

World Stock Exchange, Re (2000), 9 A.S.C.S. 658 (Alta. Securities Comm.) — referred to

98

Yahoo!, Inc. v. La Ligue Contre Le Racisme et L’Antisemitisme (2001), 145 F.Supp.2d 1168 (U.S. N.D. Cal.) — referred to

99

Cases considered by LeBel J. (dissenting):

100

Beals v. Saldanha (2003), 2003 SCC 72, 2003 CarswellOnt 5101, 2003 CarswellOnt 5102, 39 B.L.R. (3d) 1, 39 C.P.C. (5th) 1, 234 D.L.R. (4th) 1, [2003] 3 S.C.R. 416, 314 N.R. 209, 182 O.A.C. 201 (S.C.C.) — referred to

101

Croft v. Dunphy (1932), [1933] A.C. 156, [1932] 3 W.W.R. 696, 59 C.C.C. 141, [1933] 1 D.L.R. 225, [1932] All E.R. Rep. 154, 102 L.J.P.C. 6, 148 L.T. 62, 48 T.L.R. 652, (1932) 43 Ll. L. Rep. 435, 1932 CarswellNat 51 (Canada P.C.) — considered

102

Daniels v. White (1968), [1968] S.C.R. 517, 4 C.R.N.S. 176, 64 W.W.R. 385, [1969] 1 C.C.C. 299, 2 D.L.R. (3d) 1, 1968 CarswellMan 23 (S.C.C.) — referred to

103

Hunt v. T & N plc (1993), [1994] 1 W.W.R. 129, 21 C.P.C. (3d) 269, (sub nom. Hunt v. Lac d’Amiante du Québec Ltée) 37 B.C.A.C. 161, (sub nom. Hunt v. Lac d’Amiante du Québec Ltée) 60 W.A.C. 161, (sub nom. Hunt v. T&N plc) 109 D.L.R. (4th) 16, 85 B.C.L.R. (2d) 1, (sub nom. Hunt v. Lac d’Amiante du Québec Ltée) 161 N.R. 81, (sub nom. Hunt v. T&N plc) [1993] 4 S.C.R. 289, 1993 CarswellBC 1271, 1993 CarswellBC 294 (S.C.C.) — referred to

104

Morguard Investments Ltd. v. De Savoye (1990), 46 C.P.C. (2d) 1, 15 R.P.R. (2d) 1, 76 D.L.R. (4th) 256, 122 N.R. 81, [1991] 2 W.W.R. 217, 52 B.C.L.R. (2d) 160, [1990] 3 S.C.R. 1077, 1990 CarswellBC 283, 1990 CarswellBC 767 (S.C.C.) — referred to

105

Québec (Procureur général) v. Lessard (1982), (sub nom. Bolduc v. Quebec (Attorney General)) 28 C.R. (3d) 193, (sub nom. Bolduc v. Quebec (Attorney General)) 43 N.R. 185, (sub nom. Bolduc v. Quebec (Attorney General)) 137 D.L.R. (3d) 674, (sub nom. Bolduc v. Quebec (Attorney General)) 68 C.C.C. (2d) 413, [1982] 1 S.C.R. 573, 1982 CarswellQue 107, 1982 CarswellQue 12 (S.C.C.) — referred to

106

R. v. Arcadi (1931), [1932] S.C.R. 158, 57 C.C.C. 130, [1932] 2 D.L.R. 441, 1931 CarswellQue 46 (S.C.C.) — referred to

107

R. v. Sharpe (2001), 2001 SCC 2, 2001 CarswellBC 82, 2001 CarswellBC 83, 194 D.L.R. (4th) 1, 150 C.C.C. (3d) 321, 39 C.R. (5th) 72, 264 N.R. 201, 146 B.C.A.C. 161, 239 W.A.C. 161, 88 B.C.L.R. (3d) 1, [2001] 6 W.W.R. 1, [2001] 1 S.C.R. 45, 86 C.R.R. (2d) 1 (S.C.C.) — referred to

108

Reference re Offshore Mineral Rights (1967), [1967] S.C.R. 792, 62 W.W.R. 21, 65 D.L.R. (2d) 353, 1967 CarswellNat 258 (S.C.C.) — referred to

109

Reference re Seabed & Subsoil of Continental Shelf Offshore Newfoundland (1984), [1984] 1 S.C.R. 86, 5 D.L.R. (4th) 385, 51 N.R. 362, 1984 CarswellNat 698, 1984 CarswellNat 698F (S.C.C.) — referred to

110

Statutes considered by Binnie J.:

111

Canadian Human Rights Act, R.S.C. 1985, c. H-6

112

Generally — considered

113

Copyright Act, R.S.C. 1985, c. C-42

114

Generally — considered

115

s. 2 “collective society” — considered

116

s. 2 “copyright” — considered

117

s. 2 “telecommunication” [en. 1988, c. 65, s. 61] — considered

118

s. 2.4(1) [en. 1997, c. 24, s. 2] — considered

119

s. 2.4(1)(b) [en. 1997, c. 24, s. 2] — considered

120

s. 3(1) — referred to

121

s. 3(1)(f) — considered

122

s. 3(1)(f) [rep. & sub. 1988, c. 65, c. 62(1)] — referred to

123

s. 27(1) — considered

124

Copyright Act 1968, No. 163, 1968

125

s. 10(1) “communicate” — considered

126

s. 10(1) “to the public” — considered

127

Copyright Amendment (Digital Agenda) Act 2000, No. 110, 2000

128

Generally — referred to

129

Copyrights Act, 1997, 17 U.S.C.

130

s. 512 [en. Pub. L. 105-304, s. 202] — considered

131

s. 512(b)(2)(E) [en. Pub. L. 105-304, s. 202] — considered

132

Digital Millenium Copyright Act, 1998, Pub. L. 105-304, 112 Stat. 2860

133

Generally — considered

134

Statutes considered by LeBel J.:

135

Constitution Act, 1867 (U.K.), 30 & 31 Vict., c. 3, reprinted R.S.C. 1985, App. II, No. 5

136

Generally — considered

137

Constitution Act, 1982, being Schedule B to the Canada Act 1982 (U.K.), 1982, c. 11, reprinted R.S.C. 1985, App. II, No. 44

138

s. 52(2)(b) — referred to

139

s. 52(2)(c) — referred to

140

Sched., item 17 — referred to

141

Copyright Act, R.S.C. 1985, c. C-42

142

Generally — considered

143

s. 3(1)(f) — considered

144

Statute of Westminster, 1931 (22 & 23 Geo. 5), c. 4

145

Generally — considered

146

s. 3 — considered

147

Treaties considered by Binnie J.:

148

Berne Convention for the Protection of Literary and Artistic Works, 1886, 828 U.N.T.S. 221

149

Generally — referred to

150

European Union Directive, 2000/31/EC

151

Generally — considered

152

Preamble (17) — considered

153

Preamble (19) — considered

154

Preamble (22) — considered

155

Preamble (42) — considered

156

Article 2(a) “information society services” — considered

157

Article 3 ¶ 1 — considered

158

Article 13 ¶ 1 — considered

159

Article 13 ¶ 1(e) — considered

160

WIPO Copyright Treaty, 1996, 36 I.L.M. 65

161

Generally — referred to

162

Article 8 — considered

163

WIPO Performances and Phonograms Treaty, 1996, 36 I.L.M. 76

164

Generally — referred to

165

Treaties considered by LeBel J.:

166

Agreement on Trade-Related Aspects of Intellectual Property Rights, 25 I.I.C. 209, 1869 U.N.T.S. 299, 33 I.L.M. 1125

167

Generally — referred to

168

Berne Convention for the Protection of Literary and Artistic Works, 1886, 828 U.N.T.S. 221

169

Generally — referred to

170

Article 5 — considered

171

WIPO Copyright Treaty, 1996, 36 I.L.M. 65

172

Generally — referred to

173

Article 8 — considered

174

WIPO Performances and Phonograms Treaty, 1996, 36 I.L.M. 76

175

Generally — referred to

176

Words and phrases considered

177

BACKBONE SERVICE PROVIDERS

178

[Per Binnie J. (McLachlin C.J.C. and Iacobucci, Major, Bastarache, Arbour, Deschamps and Fish JJ. concurring):] [ . . . ] the Backbone Service Providers,which are the entities that do not retail Internet services to individual subscribers but provide the facilities and long distance connections including fibre optics and telephone lines that support the Internet.

179

CACHING

180

[Per Binnie J. (McLachlin C.J.C. and Iacobucci, Major, Bastarache, Arbour, Deschamps and Fish JJ. concurring):] A particular issue arose in respect of the appellants’ use of “caching”. When an end user visits a Web site, the packets of data needed to transmit the requested information will come initially from the host server where the files for this site are stored. As they pass through the hands of an Internet Service Provider, a temporary copy may be made and stored on its server. This is a cache copy. If another user wants to visit this page shortly thereafter, using the same Internet Service Provider, the information may be transmitted to the subsequent user either directly from the Web site or from what is kept in the cache copy. The practice of creating “caches” of data speeds up the transmission and lowers the cost. The subsequent end user may have no idea that it is not getting the information directly from the original Web site. Cache copies are not retained for long periods of time since, if the original files change, users will get out-of-date information. The Internet Service Provider controls the existence and duration of caches on its own facility, although in some circumstances it is open to a content provider to specify no caching, or an end user to program its browser to insist on content from the original Web site.

181

HOST SERVER

182

[Per Binnie J. (McLachlin C.J.C. and Iacobucci, Major, Bastarache, Arbour, Deschamps and Fish JJ. concurring):] A content provider may store files on its own computer, but it may also purchase space on a “host server” operated by an Internet Service Provider under commercial arrangements that include storing, making available and transmitting Web site content to end users. Once a musical work or other content has been posted on a host server, it is possible for any person with a computer and an arrangement with an Internet Service Provider to access the work on demand from anywhere in the world via the Internet.

183

[ . . . ]

184

The host server breaks the content down into units of data called “packets” [ . . . ] The host server transmits the packets to a router which reads the address in the packet’s header and performs computations to determine the most appropriate transmission route over which to send the packet to its destination.

185

HYPERLINKS

186

[Per Binnie J. (McLachlin C.J.C. and Iacobucci, Major, Bastarache, Arbour, Deschamps and Fish JJ. concurring):] The Board was also required to consider the potential copyright infringement of “hyperlinks”, particularly when the link is automatic. Automatic links employ an embedded code in the Web page that automatically instructs the browser, upon obtaining access to the first site, to download a file from a second site. The user does not need to do anything but visit the initial site before information from the second site is “pulled”. A different legal issue may arise where the user must take action, such as to click the mouse button over the hyperlink, in order to obtain access to the information from the second site.

187

NECESSARY

188

[Per Binnie J. (McLachlin C.J.C. and Iacobucci, Major, Bastarache, Arbour, Deschamps and Fish JJ. concurring):] The words of s. 2.4(1)(b) [of the Copyright Act, R.S.C. 1985, c. C-42] must be read in their ordinary and grammatical sense in the proper context. “Necessary” is a word whose meaning varies somewhat with the context. The word, according to Black’s Law Dictionary,

189

may mean something which in the accomplishment of a given object cannot be dispensed with, or it may mean something reasonably useful and proper, and of greater or lesser benefit or convenience, and its force and meaning must be determined with relation to the particular object sought. [Emphasis added.] (Black’s Law Dictionary (6th ed. 1990), at p. 1029)

190

In context, the word “necessary” in s. 2.4(1)(b) is satisfied if the means are reasonably useful and proper to achieve the benefits of enhanced economy and efficiency.

191

PACKETS

192

[Per Binnie J. (McLachlin C.J.C. and Iacobucci, Major, Bastarache, Arbour, Deschamps and Fish JJ. concurring):] The host server breaks the content down into units of data called “packets” consisting of a series of bytes (typically no more than 1500). Each packet has a destination address attached to it in the form of a “header”. The host server transmits the packets to a router which reads the address in the packet’s header and performs computations to determine the most appropriate transmission route over which to send the packet to its destination. The router does not access the data portion of the packet. The various packets are forwarded from router to router and may follow different transmission routes along the way until they reach the Internet Service Provider at the receiving end which, under contract to the end user, transmits the packets to a computer operated by the end user. The result is the reconstitution on the end user’s computer of all that is required to view or, in the case of music, “to play” the work, either at that time or later if the work is saved on the end user’s computer.

193

PROTOCOLS

194

[Per Binnie J. (McLachlin C.J.C. and Iacobucci, Major, Bastarache, Arbour, Deschamps and Fish JJ. concurring):] The Internet operates by means of a series of protocols that enable higher level applications such as the World Wide Web to operate. Transmission control protocol (”TCP”) is the most common protocol and it controls most of the applications used on the Internet. The TCP resides in both host server and end user computers and it controls the sending and receipt of packets transmitted over the Internet. However, routers and other intermediate points on the Internet have no involvement in TCP operation.

195

TELECOMMUNICATION

196

[Per Binnie J. (McLachlin C.J.C. and Iacobucci, Major, Bastarache, Arbour, Deschamps and Fish JJ. concurring):] It is an infringement for anyone to do, without the consent of the copyright owner, “anything that, by this Act, only the owner of the copyright has the right to do” (s. 27(1)) [of the Copyright Act, R.S.C. 1985, c. C-42] , including, since the 1988 amendments, the right “to communicate the work to the public by telecommunication ... and to authorize any such acts” (emphasis added) (s. 3(1)(f)). In the same series of amendments, “telecommunication” was defined as “any transmission of signs, signals, writings, images or sounds or intelligence of any nature by wire, radio, visual, optical or other electromagnetic system” (s. 2). The Board ruled that a telecommunication occurs when the music is transmitted from the host server to the end user. I agree with this.

197

THE MEANS

198

[Per Binnie J. (McLachlin C.J.C. and Iacobucci, Major, Bastarache, Arbour, Deschamps and Fish JJ. concurring):] Section 2.4(1)(b) [of the Copyright Act, R.S.C. 1985, c. C-42] shields from liability the activities associated with providing the means for another to communicate by telecommunication. “The means”, as the Board found, “... are not limited to routers and other hardware. They include all software connection equipment, connectivity services, hosting and other facilities and services without which such communications would not occur” (at p. 452). I agree. So long as an Internet intermediary does not itself engage in acts that relate to the content of the communication, i.e. whose participation is content neutral, but confines itself to providing “a conduit” for information communicated by others, then it will fall within s. 2.4(1)(b).

199

Termes et locutions cités

200

FOURNISSEURS DE SERVICES DE RÉSEAU DE BASE

201

[Binnie, J. (McLachlin, J.C.C., Iacobucci, Major, Bastarache, Arbour, Deschamps et Fish, J.J., souscrivant à l’opinion de Binnie, J.):] [ . . . ] tles fournisseurs de services de réseau de base, qui ne vendent pas des services Internet à des abonnés individuels, mais fournissent les installations et les connexions interurbaines, y compris les fibres optiques et les lignes téléphoniques qui tiennent lieu d’infrastructure à l’Internet.

202

MISE EN ANTÉMÉMOIRE

203

[Binnie, J. (McLachlin, J.C.C., Iacobucci, Major, Bastarache, Arbour, Deschamps et Fish, J.J., souscrivant à l’opinion de Binnie, J.):] Une question particulière s’est posée au sujet du recours des appelantes à la « mise en antémémoire ». Lorsqu’un utilisateur final visite un site Web, les paquets de données nécessaires pour transmettre l’information demandée proviennent au départ du serveur hôte où sont stockés les fichiers de ce site. Lorsque les fichiers passent par un fournisseur de services Internet, ce dernier peut en faire une copie provisoire et la conserver dans son serveur. Il s’agit d’une antémémoire. Si un autre utilisateur souhaite consulter cette page peu après par l’entremise du même fournisseur de services Internet, l’information peut lui être transmise à partir du site Web directement ou de l’antémémoire. La création d’une « antémémoire » accélère la transmission et réduit les coûts. L’utilisateur final subséquent peut ignorer totalement que l’information ne lui parvient pas directement du site Web initial. L’antémémoire n’est pas conservée longtemps, car si le fichier initial est modifié, l’utilisateur obtiendra une information périmée. Le fournisseur de services Internet décide de l’existence d’une antémémoire et de sa durée; toutefois, dans certaines circonstances, un fournisseur de contenu peut préciser qu’il ne doit pas y avoir d’antémémoire, ou un utilisateur final peut programmer son navigateur de manière à exiger l’accès au contenu du site Web initial.

204

SERVEUR HÔTE

205

[Binnie, J. (McLachlin, J.C.C., Iacobucci, Major, Bastarache, Arbour, Deschamps et Fish, J.J., souscrivant à l’opinion de Binnie, J.):] Un fournisseur de contenu peut stocker des fichiers dans son propre ordinateur. Il peut aussi acheter de l’espace dans un « serveur hôte » exploité par un fournisseur de services Internet. Il conclut alors une entente commerciale prévoyant le stockage du contenu d’un site Web, son accessibilité et sa transmission aux utilisateurs finaux. Une fois l’oeuvre musicale ou l’autre contenu rendu disponible sur un serveur hôte, quiconque possède un ordinateur et a conclu une entente avec un fournisseur de services Internet peut, où qu’il se trouve dans le monde, y accéder sur demande.

206

[ . . . ]

207

Le serveur hôte divise le contenu en unités de données appelées « paquets », [ . . . ]. Chaque paquet comporte une adresse de destination sous forme d’« en-tête ». Le serveur hôte transmet les paquets à un routeur qui lit l’adresse dans l’en-tête et détermine à l’issue de calculs le meilleur itinéraire d’acheminement. Le routeur n’a pas accès aux données.

208

HYPERLIENS

209

[Binnie, J. (McLachlin, J.C.C., Iacobucci, Major, Bastarache, Arbour, Deschamps et Fish, J.J., souscrivant à l’opinion de Binnie, J.):] La Commission devait également se pencher sur la violation éventuelle du droit d’auteur par un « hyperlien », spécialement lorsqu’il est automatique, un code intégré à la page Web ordonnant automatiquement au navigateur, lorsque l’accès au premier site est obtenu, de télécharger un fichier à partir d’un second site. L’utilisateur n’a rien d’autre à faire que de visiter le site initial pour que l’information soit « extraite » du second site. Une question de droit différente pourrait se poser si l’utilisateur devait faire quelque chose, comme cliquer sur l’hyperlien, pour avoir accès à l’information du second site.

210

NÉCESSAIRE

211

[Binnie, J. (McLachlin, J.C.C., Iacobucci, Major, Bastarache, Arbour, Deschamps et Fish, J.J., souscrivant à l’opinion de Binnie, J.):] Il faut interpréter les termes employés à l’al. 2.4(1)b) [de la Loi sur le droit d’auteur, L.R.C. 1985, c. C-42] dans leur sens ordinaire et grammatical, selon le contexte. La signification du mot « nécessaire » (necessary, en anglais) varie en quelque sorte en fonction du contexte. Voici la définition qu’en donne le Black’s Law Dictionary :

212

[Traduction]

213

se dit de ce dont on ne peut faire l’économie pour accomplir quelque chose, ou de ce qui est raisonnablement utile et approprié et présente un avantage plus ou moins grand, la force et le sens de ce mot devant être déterminés eu égard à la fin recherchée. [Je souligne.] (Black’s Law Dictionary, 6e éd., 1990, p. 1029)

214

Dans le contexte considéré, un moyen est « nécessaire » au sens de l’al. 2.4(1)b) s’il est raisonnablement utile et approprié pour l’obtention des avantages que sont une économie et une efficacité accrues.

215

PAQUETS

216

[Binnie, J. (McLachlin, J.C.C., Iacobucci, Major, Bastarache, Arbour, Deschamps et Fish, J.J., souscrivant à l’opinion de Binnie, J.):] Le serveur hôte divise le contenu en unités de données appelées « paquets », lesquels se composent d’une série d’octets (au plus 1 500 en général). Chaque paquet comporte une adresse de destination sous forme d’« en-tête ». Le serveur hôte transmet les paquets à un routeur qui lit l’adresse dans l’en-tête et détermine à l’issue de calculs le meilleur itinéraire d’acheminement. Le routeur n’a pas accès aux données. Les divers paquets sont transmis d’un routeur à l’autre et peuvent suivre des itinéraires différents pour atteindre, à l’extrémité réception, le fournisseur de services, qui transmet les paquets à l’ordinateur de l’utilisateur final en application du contrat le liant à ce dernier. Le résultat est la reconstitution sur l’ordinateur de l’utilisateur final de tout ce qui est nécessaire au visionnement ou, dans le cas d’une oeuvre musicale, à l’« écoute », soit immédiatement, soit à un moment ultérieur si l’oeuvre est sauvegardée dans l’ordinateur du client.

217

PROTOCOLES

218

[Binnie, J. (McLachlin, J.C.C., Iacobucci, Major, Bastarache, Arbour, Deschamps et Fish, J.J., souscrivant à l’opinion de Binnie, J.):] L’Internet a recours à une série de protocoles permettant des applications plus évoluées comme le World Wide Web. Le plus courant, le protocole de contrôle de transmission (« TCP »), contrôle la plupart des applications utilisées sur l’Internet. Implanté dans le serveur hôte et dans l’ordinateur de l’utilisateur final, il contrôle l’envoi et la réception des paquets de données transmis sur l’Internet. Les routeurs et les autres points intermédiaires n’ont cependant rien à voir avec son fonctionnement.

219

TÉLÉCOMMUNICATION

220

[Binnie, J. (McLachlin, J.C.C., Iacobucci, Major, Bastarache, Arbour, Deschamps et Fish, J.J., souscrivant à l’opinion de Binnie, J.):] Constitue une violation du droit d’auteur l’accomplissement, sans le consentement du titulaire de ce droit, « d’un acte qu’en vertu de la présente loi seul ce titulaire a la faculté d’exécuter » (par. 27(1)) [de la Loi sur le droit d’auteur, L.R.C. 1985, c. C-42], y compris, depuis les modifications de 1988, « communiquer au public, par télécommunication, une oeuvre ... et ... autoriser ces actes » (je souligne) (al. 3(1)f)). Suivant ces mêmes modifications, « télécommunication » s’entend de « toute transmission de signes, signaux, écrits, images, sons ou renseignements de toute nature par fil, radio, procédé visuel ou optique, ou autre système électromagnétique » (art. 2). La Commission a statué qu’il y avait télécommunication lors de la transmission de l’oeuvre musicale du serveur hôte à l’utilisateur final. Je suis d’accord.

221

LES MOYENS

222

[Binnie, J. (McLachlin, J.C.C., Iacobucci, Major, Bastarache, Arbour, Deschamps et Fish, J.J., souscrivant à l’opinion de Binnie, J.):] L’alinéa 2.4(1)b) [de la Loi sur le droit d’auteur, L.R.C. 1985, c. C-42] soustrait à l’application des dispositions sur le droit d’auteur les activités liées à la fourniture à un tiers de moyens de télécommunication lui permettant d’effectuer une communication. Comme l’a conclu la Commission, « les “moyens” [...] ne se limitent pas aux routeurs et autre matériel. Ils englobent tous les logiciels de connexion, les services assurant la connectivité, les installations et services offrant l’hébergement sans lesquels la communication n’aurait pas lieu » (à la p. 39). Je suis d’accord avec elle. L’intermédiaire Internet qui ne se livre pas à une activité touchant au contenu de la communication, dont la participation n’a aucune incidence sur celui-ci et qui se contente d’être « un agent » permettant à autrui de communiquer bénéficie de l’application de l’al. 2.4(1)b).

223

APPEAL from judgment reported at Society of Composers, Authors & Music Publishers of Canada v. Canadian Assn. of Internet Providers (2002), 2002 FCA 166, 2002 CarswellNat 964, 2002 CarswellNat 965, 290 N.R. 131, 19 C.P.R. (4th) 289, 215 D.L.R. (4th) 118, [2002] 4 F.C. 3 (Fed. C.A.) reversing in part decision of Copyright Board that: (1) copyright liability attaches to content providers posting music on server located in Canada to which internet users have access, but not those whose only role is to operate server on which music is stored or to provide recipient with internet access, (2) normal activities of internet intermediaries do not constitute “a communication” for the purpose of Copyright Act and do not infringe exclusive communication rights of copyright owners, (3) transmission of music from cache does not normally constitute “a communication”, and (4) entity making other pages or websites automatically accessible to end user by way of embedded hyperlink “authorizes” communication of material available on those sites; CROSS-APPEAL by SOCAN

224

POURVOI à l’encontre du jugement publié à Society of Composers, Authors & Music Publishers of Canada v. Canadian Assn. of Internet Providers (2002), 2002 FCA 166, 2002 CarswellNat 964, 2002 CarswellNat 965, 290 N.R. 131, 19 C.P.R. (4th) 289, 215 D.L.R. (4th) 118, [2002] 4 F.C. 3 (C.A. Féd.), qui a infirmé en partie la décision rendue par la Commission du droit d’auteur statuant que: (1) les fournisseurs de contenu qui rendent accessible de la musique sur un serveur situé au Canada auquel ont accès les utilisateurs d’Internet engagent leur responsabilité en matière de droits d’auteurs tandis que ne le font pas ceux qui fournissent simplement un accès à l’Internet; (2) les activités normales des intermédiaires Internet ne constituent pas « une communication » aux fins de la Loi sur le droit d’auteur et ne violent pas les droits exclusifs de communication appartenant aux titulaires des droits d’auteur; (3) la transmission de musique à partir d’un antémémoire ne constitue pas habituellement une « communication » ; (4) l’entité qui rend automatiquement accessibles à l’utilisateur final d’autres pages ou sites Web par le biais d’hyperliens intégrés « autorise » la communication du contenu disponible sur ces sites. POURVOI INCIDENT par la SOCAN.

225

Binnie J.:

226

1      This appeal raises the difficult issue of who should compensate musical composers and artists for their Canadian copyright in music downloaded in Canada from a foreign country via the Internet. In an era when it is as easy to access a website hosted by a server in Bangalore as it is to access a website with a server in Mississauga, where is the protection for the financial rights of the people who created the music in the first place? Who, if anyone, is to pay the piper?

227

2      The Internet “exists”, notionally, in cyberspace. It has been described as a “fascinating exercise in symbiotic anarchy”; see G. S. Takach, Computer Law (2nd ed. 2003), at p. 30. It is not contained by national boundaries. The Internet thus presents a particular challenge to national copyright laws, which are typically territorial in nature.

228

3      The answer to this challenge proposed by the respondent, the Society of Composers, Authors and Music Publishers of Canada (”SOCAN”), is to seek to impose liability for royalties on the various Internet Service Providers located in Canada irrespective of where the transmission originates. There is no doubt that such an imposition, from SOCAN’s perspective, would provide an efficient engine of collection.

229

4      The appellants, on the other hand, representing a broad coalition of Canadian Internet Service Providers, resist. Their basic argument is that none of them, as found by the Copyright Board, regulate or are even in the usual case aware of the content of the Internet communications which they transmit. Like a telephone company, they provide the medium, but they do not control the message.

230

5      Parliament has spoken on this issue. In a 1988 amendment to the Copyright Act, R.S.C. 1985, c. C-42, it made it clear that Internet intermediaries, as such, are not to be considered parties to the infringing communication. They are service providers, not participants in the content of the communication. In light of Parliament’s legislative policy, when applied to the findings of fact by the Copyright Board, I agree with the Board’s conclusion that as a matter of law the appellants did not, in general, “communicate” or “authorize” the communication of musical works in Canada in violation of the respondent’s copyright within the meaning of the Copyright Act.

231

6      SOCAN sought a judicial review of the Board’s decision by the Federal Court of Appeal, which essentially upheld the Board’s exclusion of the appellants from copyright liability where they perform a pure intermediary function. However, the court, in a 2-1 majority decision, also held that where an Internet Service Provider in Canada creates a “cache” of Internet material, even for purely technical reasons, they are no longer a mere intermediary but a communicator and thus become a participant in the copyright infringement. A contrary conclusion was reached by Sharlow J.A., dissenting in part, who agreed with the Copyright Board that to cache for the purpose of enhancing Internet economy and efficiency does not constitute infringement. I agree with the dissent on this point. To that extent, the appeal should be allowed.

232

7      The respondent’s cross-appeal seeking to hold Internet intermediaries liable for copyright royalties even where serving only as a conduit should be dismissed.

233

I. Facts

234

8      The Internet is a huge communications facility which consists of a worldwide network of computer networks deployed to communicate information. A “content provider” uploads his or her data, usually in the form of a website, to a host server. The content is then forwarded to a destination computer (the end user). End users and content providers can connect to the Internet with a modem under contract with an Internet Service Provider.

235

9      An Internet transmission is generally made in response to a request sent over the Internet from the end user (referred to as a “pull”). The host server provider transmits content (usually in accordance with its contractual obligation to the content provider). The content at issue here is the copyrighted musical works in SOCAN’s repertoire.

236

10      In its decision dated October 27, 1999 ( (1999), 1 C.P.R. (4th) 417 (Copyright Bd.), at p. 441), the Copyright Board provided a succinct description of an Internet transmission:

237

First, the file is incorporated to an Internet-accessible server. Second, upon request and at a time chosen by the recipient, the file is broken down into packets and transmitted from the host server to the recipient’s server, via one or more routers. Third, the recipient, usually using a computer, can reconstitute and open the file upon reception or save it to open it later; either action involves a reproduction of the file, again as that term is commonly understood.

238

11      The respondent, SOCAN is a collective society recognized under s. 2 of the Copyright Act, to administer “performing rights” in Canada including those of (1) its Canadian member composers, authors and music publishers, and (2) foreign composers, authors and music publishers whose interest is protected by a system of reciprocal agreements with counterpart societies here and in other countries. Essentially, SOCAN administers in Canada “the world repertoire of copyright protected music”.

239

12      In 1995, SOCAN applied to the Copyright Board for approval of Tariff 22 applicable to Internet telecommunications of copyrighted music. Tariff 22 would require a licence and a royalty fee

240

...to communicate to the public by telecommunication, in Canada, musical works forming part of SOCAN’s repertoire, by a telecommunications service to subscribers by means of one or more computer(s) or other device that is connected to a telecommunications network where the transmission of those works can be accessed by each subscriber independently of any other person having access to the service.

241

13      Recognizing that there might be many participants in any Internet communication, the Board convened a Phase I hearing to “determine which activities on the Internet, if any, constitute a protected use targeted in the tariff” (at p. 424).

242

14      SOCAN initially argued that “virtually everyone involved in the Internet transmission chain is liable [to pay royalties] for the communication, including those who provide transmission services, operate equipment or software used for transmissions, provide connectivity, provide hosting services or post content” (at p. 426).

243

15      SOCAN now disclaims any intent to target the Backbone Service Providers, which are the entities that do not retail Internet services to individual subscribers but provide the facilities and long distance connections including fibre optics and telephone lines that support the Internet.

244

16      The appellants, on the other hand, stand at the portals of the Internet. They operate the infrastructure provided by the Backbone Service Providers. They retail access to the Internet both to content providers and to end user subscribers. Familiar examples include Bell Globemedia’s “Sympatico” service and the Rogers “Hi-Speed Internet” service. As such, according to SOCAN, they are not passive conduits like the Backbone Service Providers but active participants in the alleged acts of copyright infringement.

245

17      The Internet operates by means of a series of protocols that enable higher level applications such as the World Wide Web to operate. Transmission control protocol (”TCP”) is the most common protocol and it controls most of the applications used on the Internet. The TCP resides in both host server and end user computers and it controls the sending and receipt of packets transmitted over the Internet. However, routers and other intermediate points on the Internet have no involvement in TCP operation.

246

18      A content provider may store files on its own computer, but it may also purchase space on a “host server” operated by an Internet Service Provider under commercial arrangements that include storing, making available and transmitting Web site content to end users. Once a musical work or other content has been posted on a host server, it is possible for any person with a computer and an arrangement with an Internet Service Provider to access the work on demand from anywhere in the world via the Internet.

247

19      The Copyright Board found that Internet Service Providers who “host” Web sites for others are generally neither aware of nor control the content of the files stored in memory; however, in some cases they do warn content providers not to post illegal content (e.g. criminal pornography, defamatory material, copyright infringing materials, viruses, etc.), and will usually retain a master “root” password that allows them to access all the files on the server. The contract generally reserves to the host server provider the authority to periodically review for content posted in breach of their agreement and to remove such files. The existence of such means of control, and the host server provider’s discretion in whether or not to exercise them, justifies the imposition of liability for a copyright licence on host servers, according to SOCAN.

248

20      The host server breaks the content down into units of data called “packets” consisting of a series of bytes (typically no more than 1500). Each packet has a destination address attached to it in the form of a “header”. The host server transmits the packets to a router which reads the address in the packet’s header and performs computations to determine the most appropriate transmission route over which to send the packet to its destination. The router does not access the data portion of the packet. The various packets are forwarded from router to router and may follow different transmission routes along the way until they reach the Internet Service Provider at the receiving end which, under contract to the end user, transmits the packets to a computer operated by the end user. The result is the reconstitution on the end user’s computer of all that is required to view or, in the case of music, “to play” the work, either at that time or later if the work is saved on the end user’s computer.

249

21      It is evident that a single corporate entity like Rogers, Bell or AT&T Canada can play a variety of roles in Internet transmission. The Board’s analysis therefore focussed on what functions attract copyright liability. To the extent a particular entity performs a specified function, it may be liable for copyright infringement in respect of the function unless licensed.

250

22      The appellants initially argued against copyright liability on the theory that intermediaries only handle “packets” of incomplete music in computer coded compressed form, which may be sent or received out of order. In their view they were not communicating the musical works as such, and thus could not be guilty of copyright infringement. This was rejected by the Copyright Board on the basis that the fragmentation into packets was dictated by “the technical exigencies of the Internet” (at p. 447):

251

While some intermediaries may not be transmitting the entire work or a substantial part of a work, all of the packets required to communicate the work are transmitted from the server on which the work is located to the end user. Consequently, the work is communicated.

252

The correctness of this finding is no longer contested.

253

23      A particular issue arose in respect of the appellants’ use of “caching”. When an end user visits a Web site, the packets of data needed to transmit the requested information will come initially from the host server where the files for this site are stored. As they pass through the hands of an Internet Service Provider, a temporary copy may be made and stored on its server. This is a cache copy. If another user wants to visit this page shortly thereafter, using the same Internet Service Provider, the information may be transmitted to the subsequent user either directly from the Web site or from what is kept in the cache copy. The practice of creating “caches” of data speeds up the transmission and lowers the cost. The subsequent end user may have no idea that it is not getting the information directly from the original Web site. Cache copies are not retained for long periods of time since, if the original files change, users will get out-of-date information. The Internet Service Provider controls the existence and duration of caches on its own facility, although in some circumstances it is open to a content provider to specify no caching, or an end user to program its browser to insist on content from the original Web site.

254

24      SOCAN argued that where a cache copy is made on a computer located in Canada and then retransmitted, there is a distinct violation in Canada of copyright protection. This, as stated, is the issue that divided the Federal Court of Appeal.

255

25      The Board was also required to consider the potential copyright infringement of “hyperlinks”, particularly when the link is automatic. Automatic links employ an embedded code in the Web page that automatically instructs the browser, upon obtaining access to the first site, to download a file from a second site. The user does not need to do anything but visit the initial site before information from the second site is “pulled”. A different legal issue may arise where the user must take action, such as to click the mouse button over the hyperlink, in order to obtain access to the information from the second site.

256

26      While much of the Internet discussion focussed on music available on the World Wide Web, Tariff 22 may also apply to copyrighted music sent by e-mail or displayed on business bulletin boards or other Internet applications.

257

II. Relevant Statutory Provisions

258

27      Copyright Act, R.S.C. 1985, c. C-42

259

2. ...

”telecommunication” means any transmission of signs, signals, writing, images or sounds or intelligence of any nature by wire, radio, visual, optical or other electromagnetic system;

2.4 (1) For the purposes of communication to the public by telecommunication,

. . . . .

(b) a person whose only act in respect of the communication of a work or other subject-matter to the public consists of providing the means of telecommunication necessary for another person to so communicate the work or other subject-matter does not communicate that work or other subject-matter to the public; and

. . . . .

3. (1) For the purposes of this Act, “copyright”, in relation to a work, means the sole right to produce or reproduce the work or any substantial part thereof in any material form whatever, to perform the work or any substantial part thereof in public or, if the work is unpublished, to publish the work or any substantial part thereof, and includes the sole right

. . . . .

(f) in the case of any literary, dramatic, musical or artistic work, to communicate the work to the public by telecommunication,

and to authorize any such acts.

260

Loi sur le droit d’auteur, L.R.C. 1985, ch. C-42

261

2. [...]

télécommunication vise toute transmission de signes, signaux, écrits, images, sons ou renseignements de toute nature par fil, radio, procédé visuel ou optique, ou autre système électromagnétique.

[...]

2.4 (1) Les règles qui suivent s’appliquent dans les cas de communication au public par télécommunication :

[...]

b) n’effectue pas une communication au public la personne qui ne fait que fournir à un tiers les moyens de télécommunication nécessaires pour que celui-ci l’effectue;

. . . . .

3. (1) Le droit d’auteur sur l’uvre comporte le droit exclusif de produire ou reproduire la totalité ou une partie importante de l’uvre, sous une forme matérielle quelconque, d’en exécuter ou d’en représenter la totalité ou une partie importante en public et, si l’uvre n’est pas publiée, d’en publier la totalité ou une partie importante; ce droit comporte, en outre, le droit exclusif :

[...]

f) de communiquer au public, par télécommunication, une uvre littéraire, dramatique, musicale ou artistique;

Est inclus dans la présente définition le droit exclusif d’autoriser ces actes.

262

III. Judicial History

263

A. Decision of the Copyright Board

264

28      Tariff 22 proposed the amount and allocation of a royalty payable to copyright owners for the communication of music on the Internet. At the end of the first phase of its proceeding, geared to determining who might be liable to pay royalties, the Copyright Board held that a royalty can be imposed on content providers who post music on a server located in Canada that can be accessed by other Internet users. However, the Board also held that the normal activities of Internet intermediaries not acting as content providers do not constitute “a communication” for the purpose of the Copyright Act and thus do not infringe the exclusive communication rights of copyright owners. The parties did not frame an issue in relation to infringement of the right of reproduction, and its role, if any, did not play a significant part in the Board’s decision.

265

29      In reaching its conclusions the Copyright Board considered a number of questions, including the following (p. 443):

266

1 When does a communication to the public occur on the Internet?

2 Who “communicates” (in the copyright sense) on the Internet? In particular, who can benefit from paragraph 2.4(1)(b) of the Act?

3 When does the act of “authorizing” a communication on the Internet occur?

4 When does a communication on the Internet occur in Canada?

267

30      After hearing 11 days of evidence and submissions and a subsequent period of reflection, the Board concluded that an Internet communication occurs at the time the work is transmitted from the host server to the computer of the end user, regardless of whether it is played or viewed at that time, or later, or never. It is made “to the public” because the music files are “made available on the Internet openly and without concealment, with the knowledge and intent that they be conveyed to all who might access the Internet” (at p. 445). Accordingly, “a communication may be to the public when it is made to individual members of the public at different times, whether chosen by them (as is the case on the Internet) or by the person responsible for sending the work (as is the case with facsimile transmissions)” (at p. 445). This is no longer contested.

268

31      In order to determine the level of intermediate participation in Internet transmission of musical works that could trigger liability for infringement under s. 3(1)(f) of the Copyright Act, the Board was required to interpret the scope of the limitation in s. 2.4(1)(b), which says that an Internet Service Provider does not “communicate” a copyrighted work if its “only act” is to provide “the means of telecommunication necessary for another person to so communicate the work” (emphasis added).

269

32      The Board rejected SOCAN’s argument that s. 2.4(1)(b) should be narrowly construed as an exemption to copyright liability. The Board held that where an intermediary merely acts as a “conduit for communications by other persons” (at p. 453 (emphasis added)), it can claim the benefit of s. 2.4(1)(b). If an intermediary does more than merely act as a conduit, (for example if it creates a cache for reasons other than improving system performance or modifies the content of cached material), it may lose the protection. Insofar as the Internet Service Provider furnishes “ancillary” services to a content provider or end user, it could still rely on s. 2.4(1)(b) as a defence to copyright infringement, provided any such “ancillary services” do not amount in themselves to communication or authorization to communicate the work. Creation of an automatic “hyperlink” by a Canadian Internet Service Provider will also attract copyright liability.

270

33      As to “authorization”, the Board found that knowledge by an Internet Service Provider that its facilities might be used for infringing purposes was not enough to incur liability. The Internet Service Provider needed to grant “the person committing the infringement a license or permission to infringe” (at p. 458).

271

34      In the result, the Board stated that an Internet communication occurs in Canada only if it originates from a server in Canada. Thus, a content provider is subject to a royalty approved by the Board if, but only if, the content is posted on a server located in Canada.

272

B. The Federal Court of Appeal

273

1 Evans J.A. (Linden J.A. Concurring) for the Majority

274

35      SOCAN’s application for judicial review was allowed in part. Evans J.A. concluded that the standard of review of the Copyright Board’s interpretation of the s. 2.4(1)(b) defence was correctness, but as to other issues involving the application of the Copyright Act to the facts, the proper standard of review was unreasonableness.

275

36      The Federal Court of Appeal did not agree with the Board’s insistence that an Internet communication only occurred in the country where the host server is located. In its view, a communication (and therefore a royalty) may arise in respect of any telecommunication that has a real and substantial connection with Canada. The real and substantial connection test would also be applied to a content provider who authorized posting copyright material on a host server. In the court’s view, the Board’s decision undercompensated SOCAN’s members for a potential loss of music sales in the Canadian market as a result of the receipt in Canada of copyright music on the Internet.

276

37      According to Evans J.A., the Copyright Board erred in law when it ignored all connecting factors other than the location of the host server for the purpose of identifying communications that occur in Canada, and which therefore attract liability to pay a royalty to SOCAN. The most important connecting factors will normally be the location of the content provider, the end user and the intermediaries, in particular the host server. The location of the end user is a particularly important factor in determining if an Internet communication has a real and substantial connection with Canada. The location of a cache or a linked site in Canada from which material is transmitted would provide additional potential connecting factors.

277

38      As to the limited protection of s. 2.4(1)(b), the majority opinion ruled that the Board erred in law when it held that an Internet Service Provider who caches material is thereby providing a means necessary for another to communicate it. The fact that the cache enhances the speed of transmission and reduces the cost to the Internet access provider does not render the cache a practical necessity for communication. To decide otherwise would further erode copyright holders’ right to be compensated for the use of their works by others.

278

2 Sharlow J.A. (Dissenting in Part)

279

39      Sharlow J.A. disagreed with the majority on the interpretation of “necessary” in s. 2.4(1)(b), and found that in the context of that paragraph, something should be considered “necessary” for communication if it makes communication practicable or more practicable. Sharlow J.A. therefore agreed with the Board’s conclusion that intermediaries who carry out caching activities are entitled to rely on s. 2.4(1)(b) of the Act.

280

IV. Analysis

281

40      This Court has recently described the Copyright Act as providing “a balance between promoting the public interest in the encouragement and dissemination of works of the arts and intellect and obtaining a just reward for the creator (or, more accurately, to prevent someone other than the creator from appropriating whatever benefits may be generated)” (Galerie d’art du Petit Champlain inc. c. Théberge, [2002] 2 S.C.R. 336, 2002 SCC 34 (S.C.C.), at para. 30, CCH Canadian Ltd. v. Law Society of Upper Canada, [2004] 1 S.C.R. 339, 2004 SCC 13 (S.C.C.), at para. 10). The capacity of the Internet to disseminate “works of the arts and intellect” is one of the great innovations of the information age. Its use should be facilitated rather than discouraged, but this should not be done unfairly at the expense of those who created the works of arts and intellect in the first place.

282

41      The issue of the proper balance in matters of copyright plays out against the much larger conundrum of trying to apply national laws to a fast-evolving technology that in essence respects no national boundaries. Thus in Citron v. Zündel (2002), 41 C.H.R.R. D/274 (Can. Human Rights Trib.), the Canadian Human Rights Tribunal wrestled with jurisdiction over an alleged hate Web site supplied with content from Toronto but posted from a host server in California. In Earth Future Lottery, Re, [2003] 1 S.C.R. 123, 2003 SCC 10 (S.C.C.), the issue was whether sales of tickets from an Internet lottery in Prince Edward Island constituted gambling “in the province” when almost all of the targeted on-line purchasers resided elsewhere. The “cyber libel” cases multiply. In Braintech Inc. v. Kostiuk (1999), 171 D.L.R. (4th) 46 (B.C. C.A.), the British Columbia Court of Appeal refused to enforce a Texas judgment for Internet defamation against a B.C. resident where the B.C. resident’s only connection with Texas was “passive posting on an electronic bulletin board” (para. 66). There was no proof that anyone in Texas had actually looked at it. On the other hand, in Dow Jones & Co. v. Gutnick (2002), 194 A.L.R. 433, [2002] H.C.A. 56 (Australia H.C.), the High Court of Australia accepted jurisdiction over a defamation action in respect of material uploaded onto the defendant’s server in New Jersey and downloaded by end users in the State of Victoria. The issue of global forum shopping for actions for Internet torts has scarcely been addressed. The availability of child pornography on the Internet is a matter of serious concern. E-Commerce is growing. Internet liability is thus a vast field where the legal harvest is only beginning to ripen. It is with an eye to this broader context that the relatively precise questions raised by the Copyright Board must be considered.

283

A. Communication Under the Copyright Act

284

42      It is an infringement for anyone to do, without the consent of the copyright owner, “anything that, by this Act, only the owner of the copyright has the right to do” (s. 27(1)), including, since the 1988 amendments, the right “to communicate the work to the public by telecommunication ... and to authorize any such acts” (emphasis added) (s. 3(1)(f)). In the same series of amendments, “telecommunication” was defined as “any transmission of signs, signals, writings, images or sounds or intelligence of any nature by wire, radio, visual, optical or other electromagnetic system” (s. 2). The Board ruled that a telecommunication occurs when the music is transmitted from the host server to the end user. I agree with this. The respondent says that the appellants as intermediaries participate in any such transmission of their copyrighted works, and authorize others to do so, and should therefore be required to pay compensation fixed under Tariff 22.

285

43      In the United States, unlike Canada, detailed legislation has now been enacted to deal specifically with the liability of Internet intermediaries; see the Digital Millennium Copyright Act, 17 U.S.C. § 512 (1998). Australia has enacted its Copyright Amendment (Digital Agenda) Act 2000, No. 110 of 2000. The European Commission has issued a number of directives, as will be discussed. Parliament’s response to the World Intellectual Property Organization’s (WIPO) Copyright Treaty, 1996, (”WCT”) and the Performances and Phonograms Treaty, 1996, remains to be seen. In the meantime, the courts must struggle to transpose a Copyright Act designed to implement the Berne Convention for the Protection of Literary and Artistic Works of 1886, as revised in Berlin in 1908, and subsequent piecemeal amendments, to the information age, and to technologies undreamt of by those early legislators.

286

44      The Board took the view that “[t]o occur in Canada, a communication must originate from a server located in Canada on which content has been posted” (at p. 459), except perhaps if the content provider has “the intention to communicate it specifically to recipients in Canada” (at p. 460). In my view, with respect, this is too rigid and mechanical a test. An Internet communication that crosses one or more national boundaries “occurs” in more than one country, at a minimum the country of transmission and the country of reception. In Dow Jones, supra, the defendant argued that the appropriate law should be that of the jurisdiction where the host server is located, but this was rejected in favour of the law of the State of reception by the High Court of Australia. To the extent the Board held that a communication that does not originate in Canada does not occur in Canada, I disagree with its decision.

287

45      At the end of the transmission, the end user has a musical work in his or her possession that was not there before. The work has, necessarily, been communicated, irrespective of its point of origin. If the communication is by virtue of the Internet, there has been a “telecommunication”. To hold otherwise would not only fly in the face of the ordinary use of language but would have serious consequences in other areas of law relevant to the Internet, including Canada’s ability to deal with criminal and civil liability for objectionable communications entering the country from abroad.

288

46      The word “communicate” is an ordinary English word that means to “impart” or “transmit” (Shorter Oxford English Dictionary on Historical Principles (5th ed. 2002), vol. 1, at p. 463). Communication presupposes a sender and a receiver of what is transmitted; see R. v. Cremascoli (1979), [1980] 1 S.C.R. 976 (S.C.C.), at p. 995. The “communicator” is the sender, not the recipient. Thus, says SOCAN, all those entities located in Canada (other than Backbone Service Providers) who participate in the act of imparting or transmitting a copyrighted work across the Internet are guilty of infringement of the Canadian copyright. Any lesser protection, SOCAN says, would not strike an appropriate balance between the rights of copyright owners and the public interest in the encouragement and dissemination of their musical works (Théberge , at para. 30).

289

47      As the Board ruled against SOCAN on this question, we must decide what standard of judicial review is applicable.

290

B. Standard of Review

291

48      It is not necessary in this case to address at length the “pragmatic and functional” test to determine the appropriate standard of judicial review. I agree with Evans J.A. that a standard of correctness is indicated by the customary four factors: i) presence or absence of a privative clause, or statutory right of appeal; ii) the expertise of the tribunal relative to that of the reviewing court on the issue in question; iii) the purpose of the legislation and any particular provision in issue; and iv) the nature of the question (Q. v. College of Physicians & Surgeons (British Columbia), [2003] 1 S.C.R. 226, 2003 SCC 19 (S.C.C.), at paras. 26).

292

49      There is neither a preclusive clause nor a statutory right of appeal from decisions of the Copyright Board. While the Chair of the Board must be a current or retired judge, the Board may hold a hearing without any legally trained member present. The Copyright Act is an act of general application which usually is dealt with before courts rather than tribunals. The questions at issue in this appeal are legal questions. For example, the Board’s ruling that an infringement of copyright does not occur in Canada when the place of transmission from which the communication originates is outside Canada addresses a point of general legal significance far beyond the working out of the details of an appropriate royalty tariff, which lies within the core of the Board’s mandate.

293

50      None of the parties is challenging the Board’s view of the facts themselves. It is the legal significance of the facts that is in issue. In my view, accordingly the decision of the Board on the legal questions at issue in this appeal should be reviewed on a correctness standard.

294

C. Application and Scope of the Copyright Act

295

51      The Federal Court of Appeal was unanimous in its conclusion that copyright infringement occurs in Canada where there is a real and substantial connection between this country and the communication at issue. Evans J.A. stated, at para. 191:

296

In my opinion, therefore, the Copyright Board erred in law when it ignored all connecting factors other than the location of the host server for the purpose of identifying communications that occur in Canada and can therefore attract liability to pay a royalty to SOCAN.

297

52      I agree with the general proposition that the Board erred in holding that the only relevant connection between Canada and the communication is the location of the host server. As a matter of international law and practice, as well as the legislative reach of our Parliament, Canada’s jurisdiction is not so limited.

298

53      It is a different issue, however, whether Canada intended to exercise its copyright jurisdiction to impose copyright liability on every participant in an Internet communication with “a real and substantial connection” to Canada. This second issue raises questions of statutory interpretation of the Copyright Act.

299

1 Canada’s Legislative Reach

300

54      While the Parliament of Canada, unlike the legislatures of the Provinces, has the legislative competence to enact laws having extraterritorial effect, it is presumed not to intend to do so, in the absence of clear words or necessary implication to the contrary. This is because “[i]n our modern world of easy travel and with the emergence of a global economic order, chaotic situations would often result if the principle of territorial jurisdiction were not, at least generally, respected”; see Tolofson v. Jensen, [1994] 3 S.C.R. 1022 (S.C.C.), at p. 1051, per La Forest J.

301

55      While the notion of comity among independent nation States lacks the constitutional status it enjoys among the provinces of the Canadian federation (Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077 (S.C.C.), at p. 1098), and does not operate as a limitation on Parliament’s legislative competence, the courts nevertheless presume, in the absence of clear words to the contrary, that Parliament did not intend its legislation to receive extraterritorial application.

302

56      Copyright law respects the territorial principle, reflecting the implementation of a “web of interlinking international treaties” based on the principle of national treatment (see D. Vaver, Copyright Law (2000), at p. 14).

303

57      The applicability of our Copyright Act to communications that have international participants will depend on whether there is a sufficient connection between this country and the communication in question for Canada to apply its law consistent with the “principles of order and fairness ... that ensure security of [cross-border] transactions with justice”; see Morguard Investments Ltd. , supra, at p. 1097; see also Unifund Assurance Co. of Canada v. Insurance Corp. of British Columbia, [2003] 2 S.C.R. 63, 2003 SCC 40 (S.C.C.), at para. 56; R. Sullivan, Sullivan and Driedger on the Construction of Statutes (4th ed. 2002), at pp. 601-602.

304

58      Helpful guidance on the jurisdictional point is offered by La Forest J. in R. v. Libman, [1985] 2 S.C.R. 178 (S.C.C.). That case involved a fraudulent stock scheme. U.S. purchasers were solicited by telephone from Toronto, and their investment monies (which the Toronto accused caused to be routed through Central America) wound up in Canada. The accused contended that the crime, if any, had occurred in the United States, but La Forest J. took the view that “[t]his kind of thinking has, perhaps not altogether fairly, given rise to the reproach that a lawyer is a person who can look at a thing connected with another as not being so connected. For everyone knows that the transaction in the present case is both here and there” (at p. 208 (emphasis added)). Speaking for the Court, he stated the relevant territorial principle as follows (at pp. 212-13):

305

I might summarize my approach to the limits of territoriality in this way. As I see it, all that is necessary to make an offence subject to the jurisdiction of our courts is that a significant portion of the activities constituting that offence took place in Canada. As it is put by modern academics, it is sufficient that there be a “real and substantial link” between an offence and this country... [Emphasis added.]

306

59      So also, in my view, a telecommunication from a foreign state to Canada, or a telecommunication from Canada to a foreign state, “is both here and there”. Receipt may be no less “significant” a connecting factor than the point of origin (not to mention the physical location of the host server, which may be in a third country). To the same effect, see Canada (Human Rights Commission) v. Canadian Liberty Net, [1998] 1 S.C.R. 626 (S.C.C.), at para. 52; Kitakufe v. Oloya, [1998] O.J. No. 2537 (Ont. Gen. Div.). In the factual situation at issue in Citron v. Zündel Earth Future Lottery , supra, for example, the fact that the host server was located in California was scarcely conclusive in a situation where both the content provider (Zundel) and a major part of his target audience were located in Canada. The Zündel case was decided on grounds related to the provisions of the Canadian Human Rights Act, but for present purposes the object lesson of those facts is nevertheless instructive.

307

60      The “real and substantial connection” test was adopted and developed by this Court in Morguard Investments Ltd. , supra, at pp. 1108-1109, Hunt v. T & N plc, [1993] 4 S.C.R. 289 (S.C.C.), at pp. 325-6 and 328, and Tolofson , supra, at p. 1049. The test has been reaffirmed and applied more recently in cases such as Holt Cargo Systems Inc. v. ABC Containerline N.V. (Trustees of), [2001] 3 S.C.R. 907, 2001 SCC 90 (S.C.C.), at para. 71, Spar Aerospace Ltd. v. American Mobile Satellite Corp., [2002] 4 S.C.R. 205, 2002 SCC 78 (S.C.C.), Unifund, supra, at para. 54, and Beals v. Saldanha, [2003] 3 S.C.R. 416, 2003 SCC 72 (S.C.C.). From the outset, the real and substantial connection test has been viewed as an appropriate way to “prevent overreaching ... and [to restrict] the exercise of jurisdiction over extraterritorial and transnational transactions” (La Forest J. in Tolofson , supra, at p. 1049). The test reflects the underlying reality of “the territorial limits of law under the international legal order” and respect for the legitimate actions of other states inherent in the principle of international comity (Tolofson , at p. 1047). A real and substantial connection to Canada is sufficient to support the application of our Copyright Act to international Internet transmissions in a way that will accord with international comity and be consistent with the objectives of order and fairness.

308

61      In terms of the Internet, relevant connecting factors would include the situs of the content provider, the host server, the intermediaries and the end user. The weight to be given to any particular factor will vary with the circumstances and the nature of the dispute.

309

62      Canada clearly has a significant interest in the flow of information in and out of the country. Canada regulates the reception of broadcasting signals in Canada wherever originated; see Bell ExpressVu Ltd. Partnership v. Rex, [2002] 2 S.C.R. 559, 2002 SCC 42 (S.C.C.). Our courts and tribunals regularly take jurisdiction in matters of civil liability arising out of foreign transmissions which are received and have their impact here; see WIC Premium Television Ltd. v. General Instrument Corp. (2000), 8 C.P.R. (4th) 1 (Alta. C.A.); World Stock Exchange, Re (2000), 9 A.S.C.S. 658 (Alta. Securities Comm.).

310

63      Generally speaking, this Court has recognized as a sufficient “connection” for taking jurisdiction, situations where Canada is the country of transmission (Libman , supra) or the country of reception (Canada v. Liberty Net, supra). This jurisdictional posture is consistent with international copyright practice.

311

64      In a recent decision of the European Commission involving “simulcasting”, a model reciprocal agreement approved by the Commission was based on the country-of-destination principle. The decision commented that according to the principle “which appears to reflect the current legal situation in copyright law, the act of communication to the public of a copyright protected work takes place not only in the country of origin (emission-State) but also in all the States where the signals can be received (reception-States)” (at para. 21 (emphasis added)), EC, Commission Decision of 8 October 2002 relating to a proceeding under Article 81 of the EC Treaty and Article 53 of the EEA Agreement, Case No. COMP/C2/38.014 IFPI (”the Simulcasting decision”)

312

65      Canada is a signatory but not yet a party to the WIPO Copyright Treaty. This treaty responded to the development of the Internet and other on-demand telecommunications technology. Article 8 provides that:

313

...authors of literary and artistic works shall enjoy the exclusive right of authorizing any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access these works from a place and at a time individually chosen by them.

314

The “making available” right is generally exercised at the point of transmission. This does not deny the interest of the country of reception but avoids, as a matter of policy, a “layering” of royalty obligations in different countries that are parties to the WCT.

315

66      In 2000, the European Commission issued what is known as its E-Commerce Directive; see Directive 2000/31 EC of the European Parliament and of the Council of June 8, 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (”Directive on electronic commerce”), [2000] O.J. L.178/1. Its purpose was to ensure the free movement among Member States of “information society services”, defined as “any service normally provided for remuneration, at a distance, by means of electronic equipment ... and at the individual request of a recipient of a service” (Preamble, clause 17). The E-Commerce Directive preferred as a matter of policy the law of the Member State on whose territory the service provider is established (art. 3(1)). It was thought that “[i]nformation society services should be supervised at the source of the activity ... to that end, it is necessary to ensure that the competent authority provides such protection not only for the citizens of its own country but for all Community citizens” (Preamble, clause (22) (emphasis added)). The Directive notes that the place where a service provider is established should be determined by the case law of the European Court of Justice, which holds that the proper situs is not the place where the technology is, or the place where the person accessing the service is, but rather where the service provider’s centre of activities is (Preamble, clause (19)); see G. J. H. Smith, Internet Law and Regulation (3rd ed. 2002), at p. 269.

316

67      Supranational organizations such as the European Commission may thus allocate responsibility among their member States whether the state of transmission or the state of reception as a matter of policy. In the absence of such regional or international arrangements, the territorial nature of copyright law must be respected.

317

68      National practice confirms that either the country of transmission or the country of reception may take jurisdiction over a “communication” linked to its territory, although whether it chooses to do so is a matter of legislative or judicial policy; see generally M. V. Pietsch, ”International Copyright Infringement and the Internet: An Analysis of the Existing Means of Enforcement” (2001-2002), 24 Hastings Comm. & Ent. L.J. 273.

318

a. The United States

319

69      At present there is authority in the United States for taking copyright jurisdiction over both the sender of the transmission out of the United States and the receiver in the United States of material from outside that country.

320

70      In N.F.L. v. PrimeTime 24 Joint Venture, 211 F.3d 10 (U.S. 2nd Cir., 2000), the U.S. defendant caused satellite transmission of NFL football games from the U.S. to Canada. The court found this to violate the NFL’s U.S. copyright even though the broadcasts were being sent to the satellite and thence to Canada for Canadian viewers. The United States was the country of transmission. It was held sufficient to constitute U.S. copyright infringement that a significant step in the telecommunication had taken place in the United States (at p. 13):

321

...it is clear that PrimeTime’s uplink transmission of signals captured in the United Sates is a step in the process by which NFL’s protected work wends its way to a public audience. In short, PrimeTime publicly displayed or performed material in which the NFL owns the copyright. Because PrimeTime did not have authorization to make such a public performance, PrimeTime infringed the NFL’s copyright.

322

71      At the same time, some U.S. courts take the view that U.S. copyright is also breached when the U.S. is the country of reception. Thus in Los Angeles News Service v. Conus Communications Co., 969 F. Supp. 579 (U.S. C.D. Cal., 1997) , the plaintiff had videotaped riots that occurred in Los Angeles in connection with the Rodney King assault case. The CBC broadcast some of the footage in Canada. Inevitably, some homes in border States saw the CBC broadcast. The plaintiff alleged breach of U.S. copyright. The CBC moved to dismiss the U.S. proceeding for lack of jurisdiction, but was unsuccessful. The court held, at pp. 583-84:

323

Under the plain language of the Act, the subject footage was “displayed” on television sets within the United States within the meaning of the Copyright Act. To find otherwise would leave a substantial loophole in the copyright laws. Broadcasters could deliberately transmit potentially infringing material from locations across the U.S. borders for display in the United States without regard to the rights of copyright owners set forth in the U.S. Copyright Act.

324

72      Equally, in N.F.L. v. TVRadioNow Corp., 53 U.S.P.Q.2d 1831 (U.S. W.D. Pa., 2000), the court found that a Web site in Canada that “streamed” U.S. cable television through the Internet with worldwide availability infringed the U.S. transmission rights of the copyright owners despite the fact that the defendant was located in Canada and arguably was not in violation of Canadian copyright laws.

325

b. Australia

326

73      Australia has recently adopted the Copyright Amendment (Digital Agenda) Act 2000 to implement its obligations under the WIPO treaties. The definition of “communication to the public” appears to apply Australian copyright law to communications entirely within Australia, those originating within Australia and received by an end user outside Australia, and those originating outside Australia but received by an end user in Australia:

327

10. Interpretation

(1) In this Act, unless the contrary intention appears

communicate means make available online or electronically transmit (whether over a path, or a combination of paths, provided by a material substance or otherwise) a work or other subject-matter.

to the public means to the public within or outside Australia. [Emphasis added.]

328

74      The definition of “to the public” seems to permit Australian copyright holders to exact royalties on both communication from Australia of material directed to overseas audiences as well as overseas communications received in Australia.

329

c. France

330

75      An analysis of liability in France suggests that “[c]ourts will likely assert jurisdiction not only over transmissions from France, but also transmissions into France that are alleged to cause damage” (emphasis added); see D. J. Gervais, “Transmissions of Music on the Internet: An analysis of the Copyright Laws of Canada, France, Germany, Japan, the United Kingdom, and the United States” (2001), 34 Vand. J. Transnat’l L. 1363, at p. 1376. In UEJF v. Yahoo! Inc., Trib. gr. inst. Paris, May 22, 2000, the court ordered Yahoo! Inc., a U.S. based Internet company, to block access by French users to an Internet auction offering Nazi paraphernalia because [translation] “the harm is suffered in France”. (The U.S. courts refused to give effect in the United States to the French court order, not on jurisdictional grounds as such, but based on First Amendment rights; see Yahoo!, Inc. v. La Ligue Contre Le Racisme et L’Antisemitisme, 145 F.Supp.2d 1168 (U.S. N.D. Cal., 2001)).

331

76      Accordingly, the conclusion that Canada could exercise copyright jurisdiction in respect both of transmissions originating here and transmissions originating abroad but received here is not only consistent with our general law (Libman , supra, and Canada v. Liberty Net, supra) but with both national and international copyright practice.

332

77      This conclusion does not, of course, imply imposition of automatic copyright liability on foreign content providers whose music is telecommunicated to a Canadian end user. Whether or not a real and substantial connection exists will turn on the facts of a particular transmission (Braintech, supra). It is unnecessary to say more on this point because the Canadian copyright liability of foreign content providers is not an issue that arises for determination in this appeal, although, as stated, the Board itself intimated that where a foreign transmission is aimed at Canada, copyright liability might attach.

333

78      This conclusion also raises the spectre of imposition of copyright duties on a single telecommunication in both the State of transmission and the State of reception, but as with other fields of overlapping liability (taxation for example), the answer lies in the making of international or bilateral agreements, not in national courts straining to find some jurisdictional infirmity in either State.

334

2 The Interpretation of the Copyright Act

335

79      I therefore turn to the question of the extent to which Canada has exercised its copyright jurisdiction in relation to the Internet Service Providers at issue in this appeal.

336

80      SOCAN asserts Canadian copyright in the material transmitted from outside Canada to an end user in Canada. It is true that end users in Canada wind up with copyrighted material in their possession, and a communication to the Canadian user has therefore occurred. The question is whether Tariff 22 imposes a licensing requirement on the appellants and others performing an intermediary function in telecommunications.

337

81      At this point the prospect of seeking to collect royalties from foreign infringers is not an attractive prospect for SOCAN. The question therefore is whether any or all of the appellants, in the ordinary course of their business, impart or transmit copyrighted music, and thereby do themselves infringe the copyrights represented by the respondent, within the meaning of the Act.

338

82      In Canada, copyright is a creature of statute, and the rights and remedies provided by the Copyright Act are exhaustive; see CCH, supra, at para. 9; Théberge , supra, at para. 5; Bishop v. Stevens, [1990] 2 S.C.R. 467 (S.C.C.), at p. 477; Compo Co. v. Blue Crest Music Inc. (1979), [1980] 1 S.C.R. 357 (S.C.C.), at p. 373.

339

83      The respondent must show that the appellants infringed its “sole right”, in relation to the musical works at issue, to “communicate to the public by telecommunication”.

340

84      This will require consideration of two related legal issues:

341

i) Can the appellants claim the protection of the limitation in s. 2.4.(1)(b)?

ii) What is the meaning of “authorization” of copyright infringement, in the context of Internet communications?

342

a. The Section 2.4(1)(b) Protection

343

85      A telecommunication starts, as the Board found, at p. 450, with the content provider.

344

The fact that [the communication] is achieved at the request of the recipient or through an agent neither adds to, nor detracts from the fact that the content provider effects the communication.

345

86      The 1988 amendments to the Copyright Act specify that participants in a telecommunication who only provide “the means of telecommunication necessary” are deemed not to be communicators. The section as presently worded provides as follows:

346

2.4 (1) For the purposes of communication to the public by telecommunication,

. . . . .

(b) a person whose only act in respect of the communication of a work or other subject-matter to the public consists of providing the means of telecommunication necessary for another person to so communicate the work or other subject-matter does not communicate that work or other subject-matter to the public; and [Emphasis added.]

2.4 (1) Les règles qui suivent s’appliquent dans les cas de communication au public par télécommunication :

[...]

b) n’effectue pas une communication au public la personne qui ne fait que fournir à un tiers les moyens de télécommunication nécessaires pour que celui-ci l’effectue; [Je souligne.]

347

87      Parliament did not say that the intermediaries are engaged in communication of copyright content but enjoy an immunity. Instead, s. 2.4(1)(b) says that such intermediaries are deemed, for purposes of the Copyright Act, not to communicate the work to the public at all. Whether or not intermediaries are parties to the communication for legal purposes other than copyright is an issue that will have to be decided when it arises.

348

88      The respondent contends that s. 2.4(1)(b) is an exemption from liability and should be read narrowly; but this is incorrect. Under the Copyright Act, the rights of the copyright owner and the limitations on those rights should be read together to give “the fair and balanced reading that befits remedial legislation” (CCH, supra, para. 48).

349

89      Section 2.4(1)(b) is not a loophole but an important element of the balance struck by the statutory copyright scheme. It finds its roots, perhaps, in the defence of innocent dissemination sometimes available to bookstores, libraries, news vendors, and the like who, generally speaking, have no actual knowledge of an alleged libel, are aware of no circumstances to put them on notice to suspect a libel, and committed no negligence in failing to find out about the libel; see Menear v. Miguna (1996), 30 O.R. (3d) 602 (Ont. Gen. Div.), rev’d on other grounds (1997), 33 O.R. (3d) 223 (Ont. C.A.); Newton v. Vancouver (City) (1932), 46 B.C.R. 67 (B.C. S.C.); Sun Life Assurance Co. of Canada v. W. H. Smith & Son, Ltd., [1933] All E.R. 432 (Eng. C.A.) . See generally R. E. Brown, The Law of Defamation in Canada (2nd ed. (loose-leaf)), vol. 1, at §7.12(6).

350

90      The 1988 amendments, including the predecessor to s. 2.4(1)(b), followed on the recommendation of an all party Sub-Committee on the Revision of Copyright of the House of Commons Standing Committee on Communications and Culture. Its report, entitled A Charter of Rights for Creators (1985), identified the need for a broader definition of telecommunication, one that was not dependent on the form of technology, which would provide copyright protection for retransmissions. This led to the adoption of the broad definition of communication in s. 3(1)(f). In conjunction with this, the Committee recommended, at p. 80, that those who participate in the retransmission “solely to serve as an intermediary between the signal source and a retransmitter whose services are offered to the general public” should not be unfairly caught by the expanded definition. The ostensible objective, according to the Committee, was to avoid the unnecessary layering of copyright liability that would result from targeting the “wholesale” stage (p. 80).

351

91      The words of s. 2.4(1)(b) must be read in their ordinary and grammatical sense in the proper context. “Necessary” is a word whose meaning varies somewhat with the context. The word, according to Black’s Law Dictionary,

352

may mean something which in the accomplishment of a given object cannot be dispensed with, or it may mean something reasonably useful and proper, and of greater or lesser benefit or convenience, and its force and meaning must be determined with relation to the particular object sought. [Emphasis added.] (Black’s Law Dictionary (6th ed. 1990), at p. 1029)

353

In context, the word “necessary” in s. 2.4(1)(b) is satisfied if the means are reasonably useful and proper to achieve the benefits of enhanced economy and efficiency.

354

92      Section 2.4(1)(b) shields from liability the activities associated with providing the means for another to communicate by telecommunication. “The means”, as the Board found, “... are not limited to routers and other hardware. They include all software connection equipment, connectivity services, hosting and other facilities and services without which such communications would not occur” (at p. 452). I agree. So long as an Internet intermediary does not itself engage in acts that relate to the content of the communication, i.e. whose participation is content neutral, but confines itself to providing “a conduit” for information communicated by others, then it will fall within s. 2.4(1)(b). The appellants support this result on a general theory of “Don’t shoot the messenger!”.

355

93      In rejecting SOCAN’s argument on this point, the Board concluded (at p. 453):

356

In the end, each transmission must be looked at individually to determine whether in that case, an intermediary merely acts as a conduit for communications by other persons, or whether it is acting as something more. Generally speaking, however, it is safe to conclude that with respect to most transmissions, only the person who posts a musical work communicates it. [Emphasis added.]

357

94      The Board also found, after its analysis of the activities of the various participants in an Internet transmission, that the person who “make[s] the work available for communication” is not the host server provider but the content provider (at p. 450):

358

Any communication of a work occurs because a person has taken all the required steps to make the work available for communication. The fact that this is achieved at the request of the recipient or through an agent neither adds to, nor detracts from the fact that the content provider effects the communication. [Emphasis added.]

359

95      This conclusion, as I understand it, is based on the findings of fact by the Board of what an Internet intermediary, including a host server provider, actually does. To the extent they act as innocent disseminators, they are protected by s. 2.4(1)(b) of the Act. As the Board put it, at p. 452:

360

As long as its role in respect of any given transmission is limited to providing the means necessary to allow data initiated by other persons to be transmitted over the Internet, and as long as the ancillary services it provides fall short of involving the act of communicating the work or authorizing its communication, it should be allowed to claim the exemption.

361

I agree with this approach. Having properly instructed itself on the law, the Board found as a fact that the “conduit” begins with the host server. No reason has been shown in this application for judicial review to set aside that conclusion.

362

96      A comparable approach to technology infrastructure was taken by this Court in a contract dispute involving telephone companies back in 1891:

363

The owners of the telephone wires, who are utterly ignorant of the nature of the message intended to be sent, cannot be said within the meaning of the covenant to transmit a message of the purport of which they are ignorant. (Electric Despatch Co. v. Bell Telephone Co. (1891), 20 S.C.R. 83 (S.C.C.), at p. 91, per Gwynne J.)

364

97      Interpretation of s. 2.4(1)(b) in this way is consistent with art. 8 of the WIPO Copyright Treaty, 1996. In the accompanying Agreed Statements, the treaty authority states:

365

It is understood that the mere provision of physical facilities for enabling or making a communication does not in itself amount to communication within the meaning of this Treaty or the Berne Convention.

366

98      Similarly, the European E-Commerce Directive provides, in clause 42 of its Preamble that Internet intermediaries are not liable where their actions are confined to

367

the technical process of operating and giving access to a communication network over which information made available by third parties is transmitted or temporarily stored, for the sole purpose of making the transmission more efficient; this activity is of a mere technical, automatic and passive nature, which implies that the [Internet intermediary] has neither knowledge of nor control over the information which is transmitted or stored.

368

99      While lack of knowledge of the infringing nature of a work is not a defence to copyright actions generally (J. S. McKeown, Fox on Canadian Law of Copyright and Industrial Designs (4th ed. (loose-leaf)), pp. 21-4 and 21-5), nevertheless the presence of such knowledge would be a factor in the evaluation of the “conduit” status of an Internet Service Provider, as discussed below.

369

100      The Internet Service Provider, acting as an intermediary, does not charge a particular fee to its clients for music downloading (although clearly the availability of “free music” is a significant business incentive).

370

101      I conclude that the Copyright Act, as a matter of legislative policy established by Parliament, does not impose liability for infringement on intermediaries who supply software and hardware to facilitate use of the Internet. The attributes of such a “conduit”, as found by the Board, include a lack of actual knowledge of the infringing contents, and the impracticality (both technical and economic) of monitoring the vast amount of material moving through the Internet, which is prodigious. We are told that a large on-line service provider like America Online delivers in the order of 11 million transmissions a day.

371

102      Of course an Internet Service Provider in Canada can play a number of roles. In addition to its function as an intermediary, it may as well act as a content provider, or create embedded links which automatically precipitate a telecommunication of copyrighted music from another source. In such cases, copyright liability may attach to the added functions. The protection provided by s. 2.4(1)(b) relates to a protected function, not to all of the activities of a particular Internet Service Provider.

372

103      On the other hand, as Evans J.A. pointed out, at para. 141, Internet Service Providers who operate a host server would not lose the protection of paragraph 2.4(1)(b) by providing their normal facilities and services, such as housing and maintaining the servers, and monitoring “hits” on particular Web pages, because these added services are merely ancillary to the provision of disk space and do not involve any act of communication.

373

b. The Liability of the Host Server

374

104      Having held quite specifically that “the content provider effects the communication” (at p. 450) and that “only the person who posts a musical work communicates it” (at p. 453 (emphasis added)), the Board added the further limitation that to attract copyright liability “a communication must originate from a server located in Canada” (at p. 459).

375

105      This added limitation arose from a misreading by the Board of the earlier decision of the Federal Court of Appeal in Canadian Assn. of Broadcasters v. Society of Composers, Authors & Music Publishers of Canada (1994), 58 C.P.R. (3d) 190 (Fed. C.A.) (”CAB 1994”). The Board described what it conceived to be the effect of CAB 1994 as follows at p. 459:

376

CAB 1994 makes it clear that communications occur where the transmission originates. The place of origin of the request, the location of the person posting the content and the location of the original Web site are irrelevant. As a result, the right to authorize must be obtained from the person administering the right in Canada only when the information is posted on a Canadian server, and the right to communicate must be obtained from that same person only when the transmission originates from a server located in Canada. [Emphasis added.]

377

I agree with Evans J.A. that CAB 1994 which dealt with the timing of a transmission, not its location, “does not support the Board’s conclusion” (at para. 172). The correct view is that a content provider is not immunized from copyright liability by virtue only of the fact it employs a host server outside the country.

378

106      Conversely, a host server does not attract liability just because it is located in Canada. A simple “host server” test would catch communications that have no connection to Canada other than the location of a piece of physical equipment, serving a neutral role as a technological conduit. Indeed it may be “impossible for the user to predict the location of the [host] server”; see A. P. Reindl, “Choosing Law in Cyberspace: Copyright Conflicts on Global Networks” (1997-1998), 19 Mich. J. Int’l L. 799, at p. 820.

379

107      It is on this aspect of the test that I respectfully disagree with my colleague LeBel J., who accepts the Board’s geographic limitation, i.e., that for copyright purposes there is no communication in Canada unless a communication “originates from a host server located in Canada. ... [This] provides a straightforward and logical rule” (at para. 146). My colleague agrees that in the first instance the liability of a host server provider, as with any other Internet Service Provider, should be determined by whether or not the host server provider limits itself to “a conduit” function, as discussed above, and thereby qualifies for protection under s. 2.4(1)(b). However in my colleague’s view even those participants in an Internet telecommunication who step outside the “conduit” role, and who would otherwise be liable for copyright infringement, will be exempt from liability for Canadian copyright unless the host server itself happens to be located here. In my view, with respect, such an added requirement would be unduly formalistic and would tilt the balance unfairly against the copyright owners. If there are to be formalistic rules they should be imposed by Parliament.

380

108      My colleague LeBel J., at para. 149, also relies on art. 8 of the WCT, which gives the copyright owner the exclusive right of “making available to the public ... their works”, but as previously noted, the Board found that in copyright terms it is the content provider, not the host server provider, that makes the work available. Accordingly, as I see it, the issue of the relevance of art. 8 to the interpretation of the Copyright Act does not arise.

381

109      The Board found that a host server provider like AT&T Canada “merely gives the customer [i.e., the content provider] the right to place information on the servers” (at p. 441). Typically the host server provider will not monitor what is posted to determine if it complies with copyright laws and other legal restrictions. Given the vast amount of information posted, it is impractical in the present state of the technology to require the host server provider to do so. In any event, it is unrealistic to attribute to a provider an expertise in copyright law sufficient to “lawyer” all of the changing contents of its servers on an ongoing basis in the absence of alleged infringements being brought to their attention.

382

110      However, to the extent the host server provider has notice of copyrighted material posted on its server, it may, as the Board found, “respond to the complaint in accordance with the [Canadian Association of Internet Providers] Code of Conduct [which] may include requiring the customer to remove the offending material through a ‘take down notice’” (at p. 441). If the host server provider does not comply with the notice, it may be held to have authorized communication of the copyright material, as hereinafter discussed.

383

111      Shorn of its misreading of the CAB 1994 case, the Board was correct in its general conclusion on this point, which for ease of reference I set out again (at p. 453):

384

In the end, each transmission must be looked at individually to determine whether in that case, an intermediary merely acts as a conduit for communications by other persons, or whether it is acting as something more. Generally speaking, however, it is safe to conclude that with respect to most transmissions, only the person who posts a musical work communicates it. [Emphasis added.]

385

112      In my view, the Federal Court of Appeal was right to uphold this aspect of the Board’s ruling.

386

c. The Use of Caches

387

113      The majority in the Federal Court of Appeal concluded that the use of caching amounts to a function falling outside s. 2.4(1)(b). Evans J.A. took the view, at para. 132, that protection is only available “when, without that person’s activity, communication in that medium of telecommunication would not be practicable or, in all probability, would not have occurred”. This is a high eligibility test which could inhibit development of more efficient means of telecommunication. SOCAN and others representing copyright owners would always be able to argue that whatever the advances in the future, a telecommunication could still have been practicable using the old technology, and that one way or the other the telecommunication would “in all probability” have occurred. In my view, with respect, Evans J.A. has placed the bar too high.

388

114      Parliament has decided that there is a public interest in encouraging intermediaries who make telecommunications possible to expand and improve their operations without the threat of copyright infringement. To impose copyright liability on intermediaries would obviously chill that expansion and development, as the history of caching demonstrates. In the early years of the Internet, as the Board found, its usefulness for the transmission of musical works was limited by “the relatively high bandwidth required to transmit audio files” (at p. 426). This technical limitation was addressed in part by using “caches”. As the Board noted, at p. 433: “Caching reduces the cost for the delivery of data by allowing the use of lower bandwidth than would otherwise be necessary.” The velocity of new technical developments in the computer industry, and the rapidly declining cost to the consumer, is legendary. Professor Takach has unearthed the startling statistic that if the automobile industry was able to achieve the same performance-price improvements as has the computer chip industry, a car today would cost under five dollars and would get 250,000 miles to the gallon of gasoline: see Takach, supra, p. 21. Section 2.4(1)(b) reflects Parliament’s priority that this entrepreneurial push is to continue despite any incidental effects on copyright owners.

389

115      In the Board’s view, the means “necessary” under s. 2.4(1)(b) were means that were content neutral and were necessary to maximize the economy and cost-effectiveness of the Internet “conduit”. That interpretation, it seems to me, best promotes “the public interest in the encouragement and dissemination of works of the arts and intellect” (Théberge , supra, at para. 30) without depriving copyright owners of their legitimate entitlement. The creation of a “cache” copy, after all, is a serendipitous consequence of improvements in Internet technology, is content neutral, and in light of s. 2.4(1)(b) of the Act ought not to have any legal bearing on the communication between the content provider and the end user.

390

116      As noted earlier, SOCAN successfully relied on the “exigencies of the Internet” to defeat the appellants’ argument that they did not communicate a “musical work” but simply packets of data that may or may not arrive in the correct sequence. It is somewhat inconsistent, it seems to me, for SOCAN then to deny the appellants the benefit of a similar “exigencies” argument. “Caching” is dictated by the need to deliver faster and more economic service, and should not, when undertaken only for such technical reasons, attract copyright liability.

391

117      A comparable result has been reached under the U.S. Digital Millennium Copyright Act, which in part codified the result in Religious Technology Center v. Netcom On-Line Communication Services, 907 F. Supp. 1361 (U.S. N.D. Cal., 1995) , where it was observed, at pp. 1369-70:

392

These parties, who are liable under plaintiffs’ theory, do no more than operate or implement a system that is essential if Usenet messages are to be widely distributed. There is no need to construe the Act to make all of these parties infringers. Although copyright is a strict liability statute, there should still be some element of volition or causation which is lacking where a defendant’s system is merely used to create a copy by a third party.

See also M. B. Nimmer, Nimmer on Copyright, (loose-leaf ed.), vol. 3, p. 12B-13.

393

118      The European E-Commerce Directive mandates member States to exempt Internet Service Providers from copyright liability for caching. (art. 13(1)).

394

119      In my opinion the Copyright Board’s view that caching comes within the shelter of s. 2.4(1) is correct, and I would restore the Board’s conclusion in that regard.

395

d. “Authorizing” Infringement

396

120      Authorizing a communication by telecommunication is a discrete infringement of s. 3(1); see Compo Co., supra, at pp. 373 and 376.

397

121      The respondent argues that even if the appellants did not themselves infringe the copyright, they were guilty of “authorizing” content providers to do so because Internet intermediaries know that material (including copyright material) placed on their facilities by content providers will be accessed by end users. Indeed as Evans J.A. pointed out, at para. 120: “Knowledge of the content available on the Internet, including “free” music, and of end users’ interest in accessing it, are powerful inducements for end users to sign up with access providers, and content providers with operators of host servers.”

398

122      Of course there is a good deal of material on the Internet that is not subject to copyright, just as there was a good deal of law-related material in the Great Library at Osgoode Hall that was not copyrighted in the recent CCH appeal. In that case, as here, the copyright owners asserted that making available a photocopier and photocopying service by the Law Society of Upper Canada implicitly “authorized” copyright infringement. This Court, however, held that authorizing infringement under the Copyright Act is not so easily demonstrated, at para. 38, per McLachlin C.J.:

399

...a person does not authorize infringement by authorizing the mere use of equipment that could be used to infringe copyright. Courts should presume that a person who authorizes an activity does so only so far as it is in accordance with the law. This presumption may be rebutted if it is shown that a certain relationship or degree of control existed between the alleged authorizer and the persons who committed the copyright infringement. [Emphasis added.]

See also Vigneux v. Canadian Performing Right Society, [1945] A.C. 108 (Canada P.C.); Muzak Corp. v. Composers, Authors & Publishers Assn. (Canada), [1953] 2 S.C.R. 182 (S.C.C.). SOCAN contends that the host server in essence acts as a commercial partner with the content provider when material is made available on the Internet, but there was no such finding of fact by the Board, and I do not think the rights and obligations of partnership can be so casually imposed.

400

123      The operation of the Internet is obviously a good deal more complicated than the operation of a photocopier, but it is true here, as it was in the CCH case, that when massive amounts of non-copyrighted material are accessible to the end user, it is not possible to impute to the Internet Service Provider, based solely on the provision of Internet facilities, an authority to download copyrighted material as opposed to non-copyrighted material.

401

124      On this point the Board concluded as follows (at p. 458):

402

Even knowledge by an ISP that its facilities may be employed for infringing purposes does not make the ISP liable for authorizing the infringement if it does not purport to grant to the person committing the infringement a license or permission to infringe. An intermediary would have to sanction, approve or countenance more than the mere use of equipment that may be used for infringement. Moreover, an ISP is entitled to presume that its facilities will be used in accordance with law.

This conclusion is generally consistent with the decision of this Court in the CCH case, although I would point out that copyright liability may well attach if the activities of the Internet Service Provider cease to be content neutral, e.g. if it has notice that a content provider has posted infringing material on its system and fails to take remedial action.

403

125      Under the European E-Commerce Directive, access to cached information must be expeditiously curtailed when the Internet Service Provider becomes aware of infringing content. At that time, the information must be removed or access disabled at the original site (art. 13(1)(e)). Under the U.S. Digital Millennium Copyright Act, those who cache information are not liable where they act expeditiously to remove or disable access to material once notice is received that it infringes copyright (s. 512(b)(2)(E)). If the content provider disputes that the work is covered by copyright, the U.S. Act lays out a procedure for the resolution of that issue.

404

126      In the present appeal, the Federal Court of Appeal stated that, in the case of host servers, “an implicit authorization to communicate infringing material might be inferred from their failure to remove it after they have been advised of its presence on the server and had a reasonable opportunity to take it down” (at para. 160). Reference was made to Apple Computer Inc. v. Mackintosh Computers Ltd. (1986), [1987] 1 F.C. 173 (Fed. T.D.), aff’d [1990] 2 S.C.R. 209 (S.C.C.), at pp. 211 and 208, citing C.B.S. Inc. v. Ames Records & Tapes (1981), [1982] Ch. 91 (Eng. Ch. Div.), at p. 110, i.e., an Internet Service Provider may attract liability for authorization because “... indifference, exhibited by acts of commission or omission, may reach a degree from which authorisation or permission may be inferred. It is a question of fact in each case.” See also Godfrey v. Demon Internet Ltd., [1999] 4 All E.R. 342 (Eng. Q.B.).

405

127      The knowledge that someone might be using neutral technology to violate copyright (as with the photocopier in the CCH case) is not necessarily sufficient to constitute authorization, which requires a demonstration that the defendant did “[g]ive approval to; sanction, permit; favour, encourage” (CCH, para. 38) the infringing conduct. I agree that notice of infringing content, and a failure to respond by “taking it down” may in some circumstances lead to a finding of “authorization”. However, that is not the issue before us. Much would depend on the specific circumstances. An overly quick inference of “authorization” would put the Internet Service Provider in the difficult position of judging whether the copyright objection is well founded, and to choose between contesting a copyright action or potentially breaching its contract with the content provider. A more effective remedy to address this potential issue would be the enactment by Parliament of a statutory “notice and take down” procedure as has been done in the European Community and the United States.

406

128      In sum, I agree with the Court of Appeal that “authorization” could be inferred in a proper case but all would depend on the facts.

407

D. Achieving a Balance Fair to Copyright Owners

408

129      There is no doubt that the exponential growth of the Internet has created serious obstacles to the collection of copyright royalties. As Mr. Pietsch, supra, writes, at p. 278:

409

The Internet makes it possible for large numbers of people to rapidly copy protected materials worldwide. With software like Gnutella, they can do so without any centralized clearinghouse that intellectual property owners could target in an effort to enforce copyright protection, such as Napster. Such developments have led some to hypothesize that copyright law is dead because technology is so far ahead of the law that enforcement is impossible, and should not even be attempted.

See e.g. A & M Records, Inc. v. Napster, Inc., 114 F.Supp.2d 896 (U.S. N.D. Cal., 2000), aff’d and rev’d in part, 239 F.3d 1004 (U.S. C.A. 9th Cir., 2000).

410

130      It has been estimated that in 2002 sales of recorded music fell by almost 10% due to Internet-based file sharing: see Anonymous, “The music industry: In a Spin” (March 2003), The Economist 58, but this “estimate” is a matter of ongoing controversy. Some say Napster was a boon to the music recording industry.

411

131      Nevertheless, by enacting s. 2.4(1)(b) of the Copyright Act, Parliament made a policy distinction between those who abuse the Internet to obtain “cheap music” and those who are part of the infrastructure of the Internet itself. It is clear that Parliament did not want copyright disputes between creators and users to be visited on the heads of the Internet intermediaries, whose continued expansion and development is considered vital to national economic growth.

412

132      This appeal is only tangentially related to holding “the balance” between creators and users. Section 2.4(1)(b) indicates that in Parliament’s view, Internet intermediaries are not “users” at all, at least for purposes of the Copyright Act.

413

V. Disposition

414

133      For the foregoing reasons, I would allow the appeal with costs with respect to copyright liability for caches of data created in a manner that is content neutral for the purpose of economy and efficiency and dismiss the cross-appeal with costs, but otherwise return this case to the Copyright Board to proceed with Phase II of its hearings in accordance with these reasons.

415

LeBel J.:

416

I. Introduction

417

134      Among the difficult issues raised by this appeal is how to determine, under the Copyright Act, R.S.C. 1985, c. C-42, whether an Internet communication occurs in Canada. I have read my colleague Binnie J.’s reasons and, although I agree with his judgment in all other respects and with his disposition of the appeal, I respectfully disagree with his analysis of the localization issue. My disagreement is confined to the appropriate test for determining the location of an internet communication under the Copyright Act and does not touch on determining liability. For the reasons that follow, I would affirm the Board’s determination that an Internet communication occurs within Canada when it originates from a server located in Canada.

418

135      Determining whether an Internet communication occurs within Canada is critical to phase two of the Tariff 22 hearings and to future infringement enforcement proceedings because it will determine who will be liable in Canada to pay musical composers and artists for their copyright in works under the Copyright Act. A vast amount of information is distributed by the Internet every day. This includes a high volume of music and other potentially copyrighted works. Internet stakeholders need to know with a degree of certainty whether they will be liable in Canada for a communication of copyrighted works. In my opinion, the test provided by the Board -- the location of the host server -- is sound from an operational perspective; it provides the requisite predictability and best accords with the meaning and purpose of the Act. By contrast, importing the real and substantial connection test that was developed in a very different context is, in my view, inappropriate to determine whether a communication occurred within Canada.

419

II. Relevant Statutory Provisions

420

136      Copyright Act, R.S.C. 1985, c. C-42

421

3. (1) For the purposes of this Act, “copyright”, in relation to a work, means the sole right to produce or reproduce the work or any substantial part thereof in any material form whatever, to perform the work or any substantial part thereof in public or, if the work is unpublished, to publish the work or any substantial part thereof, and includes the sole right

. . . . .

(f) in the case of any literary, dramatic, musical or artistic work, to communicate the work to the public by telecommunication,

. . . . .

and to authorize any such acts.

Loi sur le droit d’auteur, L.R.C. 1985, ch. C-42

3. (1) Le droit d’auteur sur l’oeuvre comporte le droit exclusif de produire ou reproduire la totalité ou une partie importante de l’oeuvre, sous une forme matérielle quelconque, d’en exécuter ou d’en représenter la totalité ou une partie importante en public et, si l’oeuvre n’est pas publiée, d’en publier la totalité ou une partie importante; ce droit comporte, en outre, le droit exclusif :

[...]

f) de communiquer au public, par télécommunication, une oeuvre littéraire, dramatique, musicale ou artistique;

[...]

Est inclus dans la présente définition le droit exclusif d’autoriser ces actes.

422

III. Decision of the Copyright Board ( (1999), 1 C.P.R. (4th) 417 (Copyright Bd.))

423

137      The Board’s decision is more nuanced than Binnie J. avers to. The Board held that a communication occurs in Canada, under s. 3(1)(f) of the Act, where it originates from a host server located in Canada. The location of the content provider -- the person who uploads content onto a host server -- is irrelevant. The location of the end user -- the person making the request -- is also irrelevant. The Board held it is only when the copyrighted work is posted on a Canadian host server that the rights to authorize or communicate must be obtained from the person administering those rights in Canada. Foreign content providers who post content on a Canadian host server must, therefore, obtain a licence from the Canadian rights holder.

424

138      If a communication originates from a mirror site located in Canada, that constitutes a communication in Canada regardless of the location of the original site. A mirror site is an Internet site on which content from another site is copied. Further, communications triggered by an embedded hyperlink occur at the location of the site to which the hyperlink leads. If the hyperlink leads to a site on a host server situated in Canada, then the communication occurs in Canada.

425

139      However, where the host server is located outside of Canada but the content provider specifically targets Canadian recipients, the Board held that it remains an open question whether this constitutes a communication within Canada. In other words, specifically targeting a Canadian audience may well constitute a communication within Canada under the Act. Such a determination will depend on the facts of a given case, and is not foreclosed by the decision of the Board.

426

140      I would endorse the Board’s approach on this issue for the reasons that follow.

427

IV. Analysis

428

A. Extraterritorial Effect of Federal Law

429

141      As a matter of domestic law, Parliament is fully competent to enact statutes that have extraterritorial effect. This principle is not in doubt; nor is it directly implicated in this case. The question was considered by the Privy Council in Croft v. Dunphy (1932), [1933] A.C. 156 (Canada P.C.), in which a party challenged a Canadian anti-smuggling provision that authorized the seizure of vessels within twelve miles of Canada’s coast, which was nine miles beyond Canada’s then territorial waters. The Privy Council held that Parliament was fully competent to pass legislation with extraterritorial effect (at p. 163):

430

Once it is found that a particular topic of legislation is among those upon which the Dominion Parliament may competently legislate ... their Lordships see no reason to restrict the permitted scope of such legislation by any other consideration than is applicable to the legislation of a fully Sovereign State.

431

The Privy Council held that the British North America Act, 1867 (now the Constitution Act, 1867) imposed no restriction on the scope of Parliament’s plenary legislative power (at p. 167).

432

142      Any doubts in this regard had been put to rest shortly before Croft v. Dunphy , supra, was heard by the Privy Council, when the Imperial Parliament passed the Statute of Westminster, 1931 (U.K.), 22 Geo. V, c. 4. Section 3 provides: “It is hereby declared and enacted that the Parliament of a Dominion has full power to make laws having extra-territorial operation.” The Privy Council, however, did not need to consider whether s. 3 had retroactive effect because it decided that Parliament had the requisite power under the British North America Act, 1867 standing alone. Of course, the Statute of Westminster, 1931 has now been incorporated into our Constitution: see Constitution Act, 1982, s. 52(2)(b) and (c), and the Schedule, item 17.

433

143      Parliament’s power to legislate with extraterritorial effect is well settled as a matter of Canadian law: see e.g. Reference re Offshore Mineral Rights, [1967] S.C.R. 792 (S.C.C.), at p. 816; Reference re Seabed & Subsoil of Continental Shelf Offshore Newfoundland, [1984] 1 S.C.R. 86 (S.C.C.), at p. 103. I would not want Binnie J.’s use of a real and substantial connection test to be understood as a limit on Parliament’s power to legislate with extraterritorial effect. The real question is whether Parliament did in fact intend that s. 3(1)(f) of the Act apply extraterritorially. If not, what then constitutes a communication within Canada?

434

144      It is a common law presumption that Parliament does not intend legislation to apply extraterritorially. But this presumption is rebuttable where the contrary intention is expressly stated or implied by the legislation: see Québec (Procureur général) v. Lessard, [1982] 1 S.C.R. 573 (S.C.C.), at p. 578; R. v. Arcadi (1931), [1932] S.C.R. 158 (S.C.C.), at p. 159. This presumption flows from the principle of territoriality, a tenet of international law. Because each State is sovereign in its own territory, it is presumed that States hesitate to exercise jurisdiction over matters that may take place in the territory of other States: see Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077 (S.C.C.). Neither s. 3(1)(f), nor any other related provision of the Act expressly states that it applies beyond Canada’s territorial limits. Moreover, nothing in the Act impliedly gives s. 3(1)(f) extraterritorial effect, particularly given the principle of territoriality of copyright law.

435

B. Communication Within Canada

436

145      Given that Parliament did not intend the Act to have effect outside Canada, when does a communication occur within Canada for the purpose of s. 3(1)(f)? Any choice between the location of the end user, host server or content provider, or all three, will be somewhat arbitrary and will import its own set of problems. Each choice has its own supporters and critics; for an overview of positions, see A. P. Reindl, “Choosing Law in Cyberspace: Copyright Conflicts on Global Networks” (1997-1998), 19 Mich. J. Int’l L. 799.

437

146      I share the Board’s view that a communication occurs within Canada where it originates from a host server located in Canada. In this way, the copyrighted works physically exist within Canadian territory and thus attract the protection of s. 3(1)(f). This does not mean that the host server provider is liable; it is the content provider who is liable for an infringing communication. The Board’s approach, as I have observed, provides a straightforward and logical rule for locating communications occurring within Canada that will be readily applicable by the Board in setting tariffs, by the courts in infringement proceedings, and by solicitors in providing advice to their clients.

438

147      With respect, I disagree with the approach taken by Binnie J. Turning first to the real and substantial connection test, it is my view that a test that was developed by this Court to deal with the exigencies of the Canadian federation should not be lightly transposed as a rule of statutory construction. The real and substantial connection test grew out of the recognition and enforcement of judgments between sister provinces as well as the appropriate assumption of jurisdiction by a court in one province over matters affecting another province, and was more recently applied to the recognition and enforcement of foreign judgments from outside Canada: see Morguard, supra; Beals v. Saldanha, [2003] 3 S.C.R. 416, 2003 SCC 72 (S.C.C.). There is no constitutional imperative raised in this appeal, unlike interprovincial cases (Hunt v. T & N plc, [1993] 4 S.C.R. 289 (S.C.C.)), though international comity is implicated. The real and substantial connection test is not a principle of legislative jurisdiction; it applies only to courts.

439

148      The only question is whether Parliament intended the Act to have effect beyond Canada. The principle of territoriality operates at the level of a rebuttable presumption that Parliament does not intend the Act to operate beyond Canada’s borders. Moreover, copyright law is territorial in nature and thus limited to its enacting State. The territoriality principle has been incorporated into a number of international treaties, to which Canada is a signatory: see e.g. Berne Convention for the Protection of Literary and Artistic Works, 1886 (”Berne Convention”); Agreement on Trade-Related Aspects of Intellectual Property Rights, 1994 (”TRIPS”) (1869 U.N.T.S. 299); World Intellectual Property Organization Copyright Treaty, 1996 (”WCT”); and World Intellectual Property Organization Performances and Phonograms Treaty, 1996 (”PPT”).

440

149      Article 5 of the Berne Convention calls for the territorial treatment of copyright; however, the Berne Convention does not specifically address the communication of works over the Internet. Canada is a signatory to the WCT, but it is not yet party to the treaty; it has yet to ratify it. The Board refused to interpret the Act in light of the WCT because the WCT is “not binding in Canada since it has been signed but not ratified by the Canadian Government” (at p. 448). I disagree. Although Canada has not ratified the treaty, this does not mean that it should not be considered as an aid in interpreting the Act. Article 8 of the WCT provides:

441

[Right of Communication to the Public]

Without prejudice to the provisions of Articles 11(1)(ii), 11bis(1)(i) and (ii), 11ter(1)(ii), 14(1)(ii) and 14bis(1) of the Berne Convention, authors of literary and artistic works shall enjoy the exclusive right of authorizing any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access these works from a place and at a time individually chosen by them. [Emphasis added.]

442

The purpose of art. 8 of the WCT is to harmonize domestic copyright laws in the party States with respect to the right of communication of copyrighted works. We should not ignore that fact.

443

150      As McLachlin C.J. recently held, even though international norms are generally not binding without domestic implementation, they are relevant in interpreting domestic legislation: see R. v. Sharpe, [2001] 1 S.C.R. 45, 2001 SCC 2 (S.C.C.), at para. 175. Parliament is presumed not to legislate in breach of a treaty, the comity of nations and the principles of international law. This rule of construction is well established: see Daniels v. White, [1968] S.C.R. 517 (S.C.C.), at p. 541. Although the Copyright Act has not yet been amended to reflect the signing of the WCT, I believe this cannon of interpretation is equally applicable to the case at bar.

444

151      How to interpret the meaning of “communicate” in s. 3(1)(f) in the context of the Internet so as to best respect the principle of territoriality in the Berne Convention? In my opinion, the host server test adopted by the Board has the benefit of clearly complying with the territoriality requirement of international copyright law. It also accords with the WCT communication right (art. 8), which includes “the making available to the public of their works in such a way that members of the public may access these works from a place and at a time individually chosen by them”; copyrighted works are made available on the Internet when they are posted on a host server. Before they are posted on a host server, they are not available to the public.

445

152      The real and substantial connection test proposed by Binnie J. is inconsistent with the territoriality principle in that it may reach out and grasp content providers located in Bangalore who post content on a server in Hong Kong based only on the fact that the copyrighted work is retrieved by end users in Canada. Unlike a broadcaster, a content provider does not know in advance which territories will receive its transmissions. Placing an emphasis on the end user is also inconsistent with the “making available” right in the WCT. A danger with Binnie J.’s approach is that it could result in a layering of royalty obligations between States. This danger is particularly acute with the Internet: content posted on a server is usually accessible from anywhere on the globe. With respect, to say that asserting jurisdiction over communications originating elsewhere but received in Canada accords with national and international copyright practice overstates the case. A review of various national laws demonstrates precious little harmonization in law or practice.

446

153      My second concern relates to privacy issues. Insofar as is possible, this Court should adopt an interpretation of s. 3(1)(f) that respects end users’ privacy interests, and should eschew an interpretation that would encourage the monitoring or collection of personal data gleaned from Internet-related activity within the home.

447

154      Locating the communication at the place of the host server addresses privacy concerns. In general, once the content provider has posted content on a host server, it is available to the public. Owners of copyrighted works and their collective societies can easily monitor such public content by trawling the publicly accessible servers with specially designed software. Privacy concerns are diminished because it is the content provider who has made the information public by posting it on the sever. Although privacy concerns are attenuated, they are not eliminated with the host server test. It is now common for Internet site operators to collect personal data from end users when users visit their Web site: see E. Gratton, Internet and Wireless Privacy: A Legal Guide to Global Business Practices (2003), at p. 6. But that is a question for another day.

448

155      By contrast, the real and substantial connection test, insofar as it looks at the retrieval practices of end users, encourages the monitoring of an individual’s surfing and downloading activities. Such habits tend to reveal core biographical information about a person. Privacy interests of individuals will be directly implicated where owners of copyrighted works or their collective societies attempt to retrieve data from Internet Service Providers about an end user’s downloading of copyrighted works. We should therefore be chary of adopting a test that may encourage such monitoring.

449

V. Conclusion

450

156      On the whole, I would adopt the Board’s test for determining the situs of a communication because it has the virtue of simplicity; it best accords with the principle of territoriality and harmonizes our copyright law with international treaty principles; and it diminishes privacy concerns. In all other respects I agree with Binnie J. I would allow the appeal in part but otherwise remit the case to the Copyright Board to proceed with the second phase of its Tariff 22 hearings in accordance with these reasons.

451

Appeal allowed in part with costs; cross-appeal dismissed with costs.

Close

Annotated Text Information

June 21, 2016

Society of Composers, Authors and Music Publishers of Canada v. Canadian Assn. of Internet Providers

Society of Composers, Authors and Music Publishers of Canada v. Canadian Assn. of Internet Providers

Author Stats

Ariel Katz Research Assistant

Research Assistant

University of Toronto, Faculty of Law

Expand
Leitura Garamond Futura Verdana Proxima Nova Dagny Web
small medium large extra-large