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Society of Composers, Authors and Music Publishers of Canada v Bell Canada

2012 SCC 36 (July 12, 2012)

Overview

The Supreme Court of Canada considered whether free previews of musical works provided over the Internet by online music service providers fit within the fair dealing exception to copyright infringement. The Court unanimously held that the free previews satisfy the test for fair dealing and, therefore, do not infringe copyright.

Abstract

The Society of Composers, Authors and Music Publishers of Canada ("SOCAN") sought compensation for the provision of free previews of musical works by online music service providers including Bell Canada, Apple Canada Inc. and others. The previews consist of 30 to 90 second extracts of musical works that are streamed to users' computers such that no copies of the extracts remain on the users' computers after the extracts have been previewed. The issue in this case was whether these previews are fair dealing for the purpose of research under section 29 of the Canadian Copyright Act. The Supreme Court of Canada ("SCC") applied a two-part test set out in the SCC's earlier decision CCH Canadian Ltd v Law Society of Upper Canada, 2004 SCC 13. The first step of the test is to determine whether the dealing was for the purpose of research. The SCC held that the proper perspective for this step of the test is that of the users and not the online providers. Users listening to previews to help identify what music to purchase was held to constitute research. The second step of the test is determining whether the dealing is fair. The SCC considered six factors from the CCH decision in concluding that the dealing was fair and that the previews amount to fair dealing and do not infringe copyright.


Case summary

Facts. Bell Canada, Apple Canada Inc., and other respondent parties provide online music services that sell digital files of musical works to users over the Internet. The online music services allow users to listen to free previews of the musical works. A preview consists of an extract of a musical work, usually between 30 and 90 seconds. The preview is streamed to the user's computer such that no permanent copy is stored in the user's computer.

SOCAN represents composers, authors and music publishers. SOCAN sought compensation for the provision of the free previews by the respondent service providers.

The Copyright Board of Canada held, in a 2007 decision (61 CPR (4th) 353), that the free previews constituted fair dealing for the purpose of research under section 29 of the Canadian Copyright Act and, thus, did not infringe copyright. SOCAN appealed the Board's decision to the Canadian Federal Court of Appeal, which upheld the Board's decision (2010 FCA 123).

Analysis. The Supreme Court of Canada first affirmed the principle that copyright requires "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," as noted in the SCC's decision in Théberge v Galerie d'Art du Petit Champlain Inc, 2002 SCC 34. The SCC then turned to the analysis of the fair dealing exception.

Section 29 of the Canadian Copyright Act states that "[f]air dealing for the purpose of research or private study does not infringe copyright." The SCC applied the two-part test for fair dealing under this section of the Act as set out in the SCC's decision in CCH Canadian Ltd v Law Society of Upper Canada, 2004 SCC 13 [CCH]. First, the dealing must be for the purpose of research or private study. Second, the dealing must be fair.

With respect to the first part of the test, the SCC considered whether the previews were for the purpose of research. The SCC adopted a statement from the CCH decision that "'[r]esearch must be given a large and liberal interpretation in order to ensure that users' rights are not unduly constrained." The SCC clarified that the proper perspective for this part of the test is that of the users of the works, and not the online providers. The SCC also rejected the argument that research must be for the creation of something new. The threshold for this part of the test was noted as being relatively low. From the users' perspective, the previews help users identify what music to purchase, and the SCC held that this constituted research, thereby satisfying the first part of the test.

Turning to the second part of the test, the SCC looked to six guiding factors set out in the CCH decision for determining whether the dealing is fair: (1) the purpose of the dealing; (2) the character of the dealing; (3) the amount of the dealing; (4) the existence of any alternatives to the dealing; (5) the nature of the work; and (6) the effect of the dealing on the work.

  1. The purpose of the dealing. The SCC held that the predominant perspective for considering the purpose of the dealing, in this case, was that of the user of the previews. The purpose of the users was held to be research to identify musical works for online purchase. The primary purpose of the providers was held to be facilitating the research purposes of the consumers. The SCC also held that dealing with a commercial purpose may still be fair if reasonable safeguards are in place to ensure that the works are actually used for research. In this case, the SCC noted that reasonable safeguards were in place because the previews were streamed, short in length and often lesser in quality than the full downloaded musical works.

  2. The character of the dealing. The SCC stated that, if a single copy of a work is used for a specific legitimate purpose, or if the copy no longer exists after being used, this points to fairness. The dealing might be unfair if multiple copies of the work are widely distributed. In view of this principle, the SCC noted that, despite the quantity of previews provided (ten times the number of downloads of full-length works), the previews were streamed and no permanent copies were provided to users, such that users could not make copies of the previews nor further disseminate them.

  3. The amount of the dealing. The SCC rejected SOCAN's argument that the aggregate number of previews provided to the users was the relevant consideration. Rather, the SCC held that "amount" refers to the "quantity of the work taken" and that the amount of the dealing should be assessed based on the individual use, not on the aggregate amount of the previews that are streamed. On this basis, the SCC agreed with the Board's characterization of the amount of the dealing as modest based on the length of individual previews compared to the whole works.

  4. The existence of any alternatives to the dealing. The SCC noted that a dealing may be considered less fair "if there is a non-copyrighted equivalent of the work that could have been used, or if the dealing was not necessary to achieve the ultimate purpose." The SCC agreed with the determination of the Board that the previews were probably the most practical, economical and safe way for users to ensure correct purchases. Thus, the previews were considered reasonably necessary.

  5. The nature of the work. For this factor, the issue is whether the work is one which should be widely disseminated. It was not disputed that it is desirable to disseminate the musical works. The SCC also noted that, because a potential consumer must be able to locate and identify a work he or she wants to buy, the previews provide the benefit of promoting dissemination the work.

  6. The effect of the dealing on the work. The SCC held that the previews were not in competition with downloads of the musical works and did not have a negative impact on the works. Instead, the previews increased the sale and dissemination of the musical works.

Based on all of the above factors, the SCC unanimously concluded that the free previews amount to fair dealing and do not infringe copyright.


Conclusion

This decision reinforces various concepts previously discussed in the Supreme Court of Canada's decision in CCH, including that the scope of the "research" branch of fair dealing is broad and is not limited to non-commercial settings. The SCC also clarified that the proper perspective for determining whether the dealing was for the purpose of research is that of the user of the works, not the online providers. This decision affirms that users' rights are an important consideration that must be properly balanced against creators' rights.

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