May 10, 2012 Gilles McDougall Secretary General Copyright Board

May 10, 2012
Gilles M. Daigle
VIA EMAIL: [email protected]
Gilles McDougall
Secretary General
Copyright Board of Canada
56 Sparks Street, Suite 800
Ottawa, ON K1A 0C9
Cher Monsieur McDougall:
Re: SOCAN’s Response to CAB’s Application for a Ruling Regarding the Applicability of
SOCAN Tariff 22.D (2007-2011)
OVERVIEW
1. This is SOCAN’s response to the above-noted application filed by CAB on May 2, 2012. CAB
requests that the Board issue a ruling that SOCAN Proposed Tariff 22.D1 for the years 2007 to
2011 shall not apply to those CAB members that operate television stations or specialty/pay
services (collectively, “CAB’s members”). For reasons that can be summarized as follows,
SOCAN requests that the CAB’s application be dismissed:
a. CAB fails to appreciate that the applicability of a proposed tariff cannot be ruled on in
advance. The Board has been clear on this point in the past and has confirmed that the
tariff certification process involves issues of mixed fact and law that cannot be
determined in the absence of evidence.
b. CAB’s interpretation of the wording of the proposed tariffs is flawed and confuses the
distinction between use-based and user-based tariffs.
c. CAB bases much of its argument on statements made by SOCAN in early and mid 2011.
However, those statements were made prior to the filing of SOCAN’s Statement of Case
on March 5, 2012, which clearly includes uses made by CAB members.
FACTS
2. As noted by CAB, the current proceedings were initially the subject of a Board ruling on
consolidation issues in April 2011. Notwithstanding the submission of any parties at the time,
1
SOCAN Proposed Tariffs 22.D and 22.E are attached as Appendix A.
the Board ruled that the proceedings would involve “the use of musical works in non-simulcast,
audio-visual transmissions other than video games.”2
3. SOCAN filed an application for an interim tariff for Proposed Tariff 22.D in June of 2011. In its
pleadings, SOCAN stated that any interim or final tariff approved by the Board for Proposed
Tariff 22.D would not be applicable to the members of CAB or other users subject to Certified
Tariffs 22.B-G (i.e., a group of tariffs for Internet uses approved by the Board on October 25,
2008).
4. However, in its application, SOCAN also made the following statements, which are not referred
to in CAB’s application:
Para 44:
For the purposes of this application for the approval of interim tariffs, and
without prejudice to any position that SOCAN may choose to advance in the upcoming
hearings for the determination of final tariffs, SOCAN proposes the tariff provisions set out
below.
Para 49:
Accordingly, SOCAN’s proposals for these interim tariffs should not be
deemed as an admission by SOCAN that the proposed rates and tariff structures are
appropriate for the final determination of these tariffs, without the benefit of a detailed
consideration of those businesses before the Board at the June 2012 hearings. Instead,
SOCAN considers these proposals as a starting point in the process leading to the
determination of final tariffs.
5. Several months later (after the Board dismissed SOCAN’s application for an interim tariff)
SOCAN commenced the preparation of its Tariff 22.D case, including its Statement of Case
(Exhibit SOCAN-1). Prior to filing and serving its case materials, SOCAN counsel contacted
CAB counsel to determine if CAB was maintaining its Objection to Proposed Tariff 22.A,
thereby requiring a copy of the SOCAN case. CAB counsel responded in the affirmative and,
accordingly, CAB was served with the SOCAN 22.D case, including Exhibit SOCAN-1, on
March 5, 2011.
6. In its Statement of Case, SOCAN took a new position as to the scope of application of its
Proposed Tariff 22.D. Its new intention was clearly expressed as including CAB members and
other users currently subject to the Board’s Certified Tariffs 22.B-G, including the SERVICES
and CBC/SRC (see paragraphs 16-37). Accordingly, CAB’s assertion that SOCAN did not make
its position clear until the last week of April 2012 is incorrect. SOCAN’s current position was
made clear when it filed its Statement of Case on March 5, 2011.
7. SOCAN remained unaware of CAB’s position on the scope of the proposed tariff (i.e., that
Proposed Tariff 22.D as described in SOCAN’s Statement of Case was not applicable to CAB
members) until the issue was raised during a telephone conversation between counsel for
SOCAN and counsel for the SERVICES on April 19th, 2012. In light of that conversation,
SOCAN counsel contacted CAB counsel and it was on April 23rd that CAB confirmed its
2
Ruling of the Board on Objectors’ application for consolidation, dated April 29, 2011
Page 2
interpretation of the scope of Proposed Tariff 22.D. Consequently, SOCAN counsel contacted
all parties by email to re-iterate the intention expressed in the SOCAN Statement of Case.
8. On May 2, 2012, CAB filed its application in the present matter.
ANALYSIS
The proper interpretation of Proposed Tariffs 22.D and 22.E
9. CAB’s argument that Proposed Tariff 22.D cannot be interpreted so as to apply to websites
operated by its members is untenable on the very face of the tariff proposal. Using the year 2011
as an example, the entire proposal reads as follows:
D. Audiovisual Webcasts
For communications of musical works as part of audiovisual works from Sites or Services
whose content is similar to that of a conventional television station subject to Tariff 2 or a
programming undertaking subject to Tariff 17, the greater of 15 per cent of the Gross
Revenues earned by the Site or Service or 15 per cent of the Gross Operating Expenses of the
Site or Service, with a minimum monthly fee of $200.00.
For greater certainty, Tariff 22.D applies to Sites or Services that communicate television
programs, films and other audiovisual content containing musical works, irrespective of the
technical nature of the communication (e.g. whether the communication is in the form of a
stream or download). (Emphasis Added)
10. CAB’s position is that the above tariff cannot purport to apply to the websites of CAB’s
members because: “...CAB members are not similar to conventional television stations [and
specialty/pay services], but in fact they are those entities...”
11. Leaving aside the highly technical nature of this argument, SOCAN submits that it must fail for
the following reasons:
a. While CAB appears to recognize, correctly, that SOCAN’s proposal is use-based, CAB’s
interpretation treats the proposal as if it were intended to be user-based in the case of
CAB members, which is incorrect. The simple and clear intention of Proposed Tariff
22.D is that it should apply to music uses forming part of communications of audiovisual
content by Internet sites (with the exception of the transmission of signals, as discussed
below). The proposal is clearly framed in terms of uses and does not purport to include
or exclude any particular type of user. There is no denying that several CAB members
operate websites that communicate audiovisual works that contain SOCAN music. Other
users do so as well. All of those communications of audiovisual works are targeted by
the tariff, including those that are effected by CAB members. The point could not have
been made any clearer than the inclusion of the “for greater certainty” clause. On that
basis alone, it is submitted that CAB’s position that “the language in the Proposed Tariff
22.D expressly excludes CAB members…” must fail.
Page 3
b. The programming found on audiovisual websites operated by CAB members is, in fact,
similar to the programming found on the conventional stations and services operated by
those members. The programming is not identical, in that some TV shows and movies
are only available on the conventional service rather than online and vice-versa. But,
generally speaking, the nature of the programming is very similar, which stands to reason
given that the CAB members in question have acquired rights to several programs that
allow them to be used on their conventional platforms and online. It is the use of music
in the Internet communication of those audiovisual works that is the subject of Proposed
Tariff 22.D, as worded, rather than any particular user. CAB’s members engage in that
use.
c. CAB’s reliance on SOCAN Proposed Tariff 22.E is misplaced and does not support its
position. Proposed Tariff 22.E, since its inception as part of the Tariff 22 filings for
2006, has always been framed in terms of the simultaneous transmission of a signal on
the Internet. There is a clear distinction between on-demand, asynchronous
communications of audiovisual works and the simultaneous Internet transmission of the
signal from a conventional television service. Proposed Tariff 22.D applies and is limited
to the former and Proposed Tariff 22.E applies to the latter. This was recognized by the
Board when, as noted above, it decided that the Tariff 22.D hearing would involve “the
use of musical works in non-simulcast, audio-visual transmissions other than video
games.”3 This clearly includes the non-simulcast uses made by the members of the CAB
through their online video-on-demand streaming services. The CAB members engage in
uses of music in SOCAN’s repertoire that fall under both these tariffs.
d. It is important to remember that the wording of Proposed Tariff 22.D (and any other tariff
proposal) is exactly that: a proposal. It is up to the Board to decide - with input from
SOCAN and the Objectors – what will be the final scope of the tariff. The CAB’s overly
technical interpretation of the proposed tariff wording is more akin to statutory
interpretation and fails to consider the real possibility that the certified tariff which results
from the June hearing may be worded differently from the proposal. This issue was very
well articulated by the Board in a ruling earlier this year that determined an application
similar to the one at hand:
Deciding whether a specific activity attracts liability necessarily involves
issues of mixed fact and law. This requires an evidentiary basis, which is best
gathered through the usual process. Ruling on the issue absent such a basis
would be ill-advised at best.
Ultimately, the parties will only be in a position to assess whether they are
subject to a particular tariff once that tariff has been certified by the Board.
Positing on the ambit of a proposed tariff - or an application for an interim
tariff - will not provide the parties with the assurances they are seeking from
this application. Significantly, the proposed tariff does not purport to ascribe
3
Ruling of the Copyright Board, dated April 29, 2011, on Objectors’ application for consolidation
Page 4
liability per se to the site or service offering user-generated content for the
communication of that content. Rather the proposed tariff seeks to collect
royalties “for communications […] from […]” such sites or services, without
specifying who may be liable for the payment of royalties. [emphasis added]4
SOCAN’s Prior Statements and CAB’s Right to Procedural Fairness
SOCAN is free to revise its position
12. CAB bases much of its argument on statements made by SOCAN prior to the filing of its
Statement of Case on March 5, 2012. However, those statements were made prior to the Board’s
determination of the scope of the current proceedings and in the context of an application for an
interim tariff that included “without prejudice” clauses (and which was dismissed by the Board in
any event). At no time was an agreement reached between CAB and SOCAN as to the
application of the tariff to CAB members (and SOCAN does not understand CAB to be claiming
any such agreement); nor was there any undertaking by SOCAN in response to a request by the
Board.
13. Moreover, one of the very purposes of filing a Statement of Case, particularly for a collective, is
to provide the Board and all other parties with an update on the positions the collective intends to
advance at the upcoming hearing. That position may change further in light of the filing of the
Objectors’ cases (which is one of the reasons a collective has a right of reply) and the evidence
presented during the hearing itself. Such changes are especially proper in the context of
administrative law proceedings.
14. In the case at hand, SOCAN set out its position on the scope of Proposed Tariff 22.D by
specifically referring to the online audiovisual activities of the Tariff 22.D Objectors in its
Statement of Case, including CAB. As noted above, CAB confirmed to SOCAN counsel that it
was remaining as an Objector prior to receiving SOCAN’s Statement of Case on March 5, 2012,
along with all of the other Objectors. Clearly CAB believed that Proposed Tariff 22.D might
apply to CAB members.
15. More importantly, having received and presumably reviewed SOCAN’s Statement of Case and
seeing the reference to the online audiovisual activities of CAB members, why did CAB not
immediately raise the issue with SOCAN or with the Board? Clearly the inclusion of CAB in the
SOCAN Statement of Case would have at least caused it to reconsider the accuracy of its
understanding that Proposed Tariff 22.D would not apply to CAB members. Yet, CAB did
nothing and it was SOCAN that took the initiative to contact CAB to discuss the situation upon
being apprised of the issue by counsel for the Services.
16. If CAB has suffered any prejudice in the circumstances at hand, it is self-inflicted due to its
failure to act promptly to clarify matters upon receiving SOCAN’s Statement of Case. By March
5, it should have been obvious to CAB that there was an apparent conflict between what it took
4
Ruling of the Copyright Board, dated January 4, 2012 on a motion by the Computer Communications Industry
Association for a declaration on the applicability of SOCAN Tariffs 22.D and 22.G, attached as Appendix B
Page 5
to be SOCAN’s position in its application for an interim tariff and SOCAN’s position as
expressed in its Statement of Case.
SOCAN Welcomes the CAB’s Participation and is Willing to be Flexible
17. SOCAN has no objection to CAB’s participation in the upcoming hearing and is prepared to
afford CAB every possible opportunity to prepare its case in the time remaining prior to the
hearing.
18. SOCAN and CAB have not exchanged interrogatories because during their discussions in 2011
they agreed to keep them in abeyance pending the outcome of preliminary settlement discussions
that might allow CAB to withdraw its Objection and not participate in the proceedings.
However, because it remained as an Objector (and still does to this day), CAB did receive copies
of SOCAN’s responses to the interrogatories served on SOCAN by the Services, Cineplex,
Apple and YouTube collectively. If CAB has any additional interrogatories, SOCAN is quite
prepared to respond to these as quickly as possible. SOCAN is also prepared to resume
settlement discussions with CAB in the event that enough common ground might be found to
reach an agreement, which would probably be in the best interests of both parties.
19. Given the circumstances, SOCAN would also be prepared to accept CAB’s Statement of Case by
no later than June 15, 2012. However, SOCAN strongly objects to any suggestion by CAB that
the current hearings scheduled to commence on June 20, 2012 be delayed as a result of this issue
given the tremendous expenditure of time and resources expended by SOCAN and the other
active Objectors up to this point in time.
All of which is submitted on this 10th day of May, 2012.
GOWLING LAFLEUR HENDERSON LLP
Gilles M. Daigle
GMD/DLW/dlm
cc.
CAB
Apple
Services
CBC
YouTube
CBC/SRC
Cineplex
OTT_LAW\ 3166836\7
Page 6
APPENDIX A
42
Supplement to the Canada Gazette
(ii) For communications of musical works as part of the signal
of a conventional CBC radio station that is otherwise subject to
Tariff 1.C, the greater of 15 per cent of the Gross Revenues
earned by the Site or Service or 15 per cent of the Gross Operating Expenses of the Site or Service, with a minimum monthly
fee of $200.00, and
(iii) For communications of musical works as part of the signal
of a conventional radio station that is otherwise subject to Tariff 1.B, the greater of 7.5 per cent of the Gross Revenues
earned by the Site or Service or 7.5 per cent of the Gross Operating Expenses of the Site or Service, with a minimum monthly
fee of $200.00.
D. Audiovisual Webcasts
For communications of musical works as part of audiovisual
works from Sites or Services whose content is similar to that of a
conventional television station subject to Tariff 2 or a programming undertaking subject to Tariff 17, the greater of 15 per cent
of the Gross Revenues earned by the Site or Service or 15 per
cent of the Gross Operating Expenses of the Site or Service, with
a minimum monthly fee of $200.00.
For greater certainty, Tariff 22.D applies to Sites or Services
that communicate television programs, films and other audiovisual content containing musical works, irrespective of the technical
nature of the communication (e.g. whether the communication is
in the form of a stream or download).
E. Webcasts of Television Station Signals
For communications of musical works as part of the signal of a
conventional television station that is otherwise subject to Tariff 2
or a programming undertaking otherwise subject to Tariff 17, the
greater of 15 per cent of the Gross Revenues earned by the Site or
Service or 15 per cent of the Gross Operating Expenses of the
Site or Service, with a minimum monthly fee of $200.00.
F. Game Sites
For communications of musical works as part of games, including gambling, from Sites or Services that consist predominantly
of games, the greater of 10 per cent of the Gross Revenues earned
by the Site or Service or 10 per cent of the Gross Operating Expenses of the Site or Service, with a minimum monthly fee of
$200.00.
G. User Generated Content
For communications of musical works from user generated
content Sites and Services, including, but not limited to, YouTube,
Facebook and MySpace, the greater of 15 per cent of the Gross
Revenues earned by the Site or Service or 15 per cent of the
Gross Operating Expenses of the Site or Service, with a minimum
monthly fee of $200.00.
In the case of amateur podcasters whose use of music represents less than 20 per cent of the podcast’s overall programming
time, and where such podcasts generate no revenues, an annual
licence fee of $60.00 shall apply.
H. Other Sites
For communications of musical works from a Site or Service
other than one mentioned in items A through G above, the greater
of 10 per cent of the Gross Revenues earned by the Site or Service or 10 per cent of the Gross Operating Expenses of the Site or
Service, with a minimum monthly fee of $200.00.
“Similar Transmission Facilities” includes a telecommunications
facility from which musical works are communicated to cellular phones or other personal communication devices, utilizing
Internet and/or other transmission protocols.
July 31, 2010
(ii) Pour les communications d’œuvres musicales faisant partie
du signal d’une station de radio conventionnelle du réseau SRC
qui est autrement assujettie au tarif 1.C : le plus élevé entre
15 pour cent des Revenus Bruts réalisés par le Site ou le Service et 15 pour cent des Coûts Bruts d’Exploitation du Site ou
du Service, sous réserve d’une redevance minimale de 200,00 $
par mois,
(iii) Pour les communications d’œuvres musicales faisant partie
du signal d’une station de radio conventionnelle qui est autrement assujettie au tarif 1.B : le plus élevé entre 7,5 pour cent
des Revenus Bruts réalisés par le Site ou le Service et 7,5 pour
cent des Coûts Bruts d’Exploitation du Site ou du Service, sous
réserve d’une redevance minimale de 200,00 $ par mois.
D. Diffusions Web audiovisuelles
Pour les communications d’œuvres musicales faisant partie
d’œuvres audiovisuelles de Sites ou de Services dont le contenu
est semblable à celui d’une station de télévision conventionnelle
assujettie au tarif 2 ou d’une entreprise de programmation assujettie au tarif 17 : le plus élevé entre 15 pour cent des Revenus Bruts
réalisés par le Site ou le Service et 15 pour cent des Coûts Bruts
d’Exploitation du Site ou du Service, sous réserve d’une redevance minimale de 200,00 $ par mois.
Il est entendu que le tarif 22.D s’applique aux Sites ou Services
qui communiquent des émissions de télévisions, films et autre
contenu audiovisuel contenant des œuvres musicales, peu importe
le mode technique de la communication (par exemple la transmission ou le téléchargement).
E. Diffusions Web de signaux de stations de télévision
Pour les communications d’œuvres musicales faisant partie du
signal d’une station de télévision conventionnelle assujettie au
tarif 2 ou d’une entreprise de programmation assujettie au tarif 17 : le plus élevé entre 15 pour cent des Revenus Bruts réalisés
par le Site ou le Service et 15 pour cent des Coûts Bruts d’Exploitation du Site ou du Service, sous réserve d’une redevance minimale de 200,00 $ par mois.
F. Sites de jeux
Pour les communications d’œuvres musicales faisant partie de
jeux, y compris le jeu de hasard, de Sites ou de Services qui
consistent surtout de jeux : le plus élevé entre 10 pour cent des
Revenus Bruts réalisés par le Site ou le Service et 10 pour cent
des Coûts Bruts d’Exploitation du Site ou du Service, sous réserve d’une redevance minimale de 200,00 $ par mois.
G. Contenu généré par utilisateurs
Pour les communications d’œuvres musicales d’un Site ou d’un
Service de contenu généré par utilisateurs, y compris YouTube,
Facebook et MySpace : le plus élevé entre 15 pour cent des Revenus Bruts réalisés par le Site ou le Service et 15 pour cent des
Coûts Bruts d’Exploitation du Site ou du Service, sous réserve
d’une redevance minimale de 200,00 $ par mois.
Dans le cas de baladodiffusion offerte gratuitement par des
amateurs dont l’usage de la musique représente moins de 20 pour
cent du temps de programmation totale, une licence annuelle de
60,00 $ s’applique.
H. Autres sites
Pour les communications d’œuvres musicales d’un Site ou d’un
Service autre que ceux mentionnés aux paragraphes A à G cidessus : le plus élevé entre 10 pour cent des Revenus Bruts réalisés par le Site ou le Service et 10 pour cent des Coûts Bruts d’Exploitation du Site ou du Service, sous réserve d’une redevance
minimale de 200,00 $ par mois.
« Autres Moyens Semblables » s’entend notamment d’un moyen
de télécommunications par lequel des œuvres musicales sont
transmises à des téléphones cellulaires ou autres appareils de
APPENDIX B
Estabrooks, Matthew
From:
Sent:
To:
Subject:
[email protected]
January-04-12 6:10 PM
[email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; Watt,
Lynne; Daigle, Gilles; Estabrooks, Matthew; [email protected]
SOCAN Tariffs 22.D and 22.G (2007-2011) - Motion by CCIA
RULING OF THE BOARD
On November 9, 2011, the Computer Communications Industry Association (CCIA) filed a motion seeking
a declaration from the Board that SOCAN’s Tariff 22 (Internet) is not applicable to sites or services which
only authorize non-infringing uses of SOCAN’s repertoire. CCIA filed this motion in response to both
proposed Tariffs 22.D and G and SOCAN’s application for an interim tariff filed on June 13, 2011.
CCIA advances three reasons in support of its application. First, such a ruling would assist objectors in
determining whether they are prospective users under the proposed tariffs and therefore, whether they
are properly a participant to the proceedings. Second, the proposed tariff explicitly mentions particular
sites and services without establishing that those sites and services engage in activities that require a
SOCAN licence. Third, the interim tariff sought by SOCAN proposes to impose liability on entities,
including CCIA members, even though the foundation for such purported liability has not yet been
established in law.
The application is dismissed on the following grounds.
To the extent that the application can be ruled upon without supporting evidence, the application is trite.
No declaration is required to confirm that SOCAN can collect royalties only when so legally entitled
pursuant to the Copyright Act, or that an activity (or the authorization of such an activity) does not attract
liability when it is unprotected or when it falls within the scope of one of the exceptions provided in the
Act.
To the extent that evidence is required before a ruling can be issued, the application is premature.
Deciding whether a specific activity attracts liability necessarily involves issues of mixed fact and law. This
requires an evidentiary basis, which is best gathered through the usual process. Ruling on the issue
absent such a basis would be ill-advised at best.
Ultimately, the parties will only be in a position to assess whether they are subject to a particular tariff
once that tariff has been certified by the Board. Positing on the ambit of a proposed tariff - or an
application for an interim tariff - will not provide the parties with the assurances they are seeking from
this application. Significantly, the proposed tariff does not purport to ascribe liability per se to the site or
service offering user-generated content for the communication of that content. Rather the proposed tariff
seeks to collect royalties “for communications […] from […]” such sites or services, without specifying who
may be liable for the payment of royalties.
Gilles McDougall Secretary General | Secrétaire général Copyright Board of Canada | Commission du droit dʹauteur du Canada 56 Sparks, Suite| Bureau 800 Ottawa ON K1A 0C9 1
Telephone | Téléphone 613.952.8624 Gilles.mcdougall@cb‐cda.gc.ca
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