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On December 12th, 2003, the Copyright Board (Canada) issued it latest decision regarding the tariff for private copying levies. Private copying of sound recordings containing musical works is addressed under Section 80 of the Copyright Act (Canada), which creates an exception to the exclusive reproduction right; it legalizes private copying onto audio recording media. Section 83 permits a copyright society to propose and collect tariffs which are imposed on those who manufacture or import blank audio recording media. These tariffs are used to pay musicians and songwriters for revenue lost due to personal copying.

The exemption in Section 80 applies only when a copy is made for the private use of the person making it. This expressly excludes selling, renting out, exposing for trade or rental, distributing, communicating to the public by telecommunication, or performing in public the copy made. This means that providing a copy to a friend is still an infringing action, as it is not a copy for personal use.

The Decision adds a new levy of between $2 and $25 (depending on the size of the device’s internal storage capability) for digital audio recorders (better known as MP3 players) including Apple’s hot selling IPod. However, the Copyright Board declined to apply a levy on blank DVDs, removable flash memory cards and removable hard drives because, according to the Copyright Board, “evidence available at this time does not clearly demonstrate that these recording media are ordinarily used by individuals for the purpose of copying music.” One result is that internal hard drives and solid state memory contained in MP3 players are subject to a royalty but any generic expansion memory which may be utilized with such devices is not.

The Copyright Board also turned down the Canadian Private Copyright Collective’s request to significantly raise levies on media currently subject to levies (cassettes, minidisks and blank CDs) and froze the existing fees until the end of 2004.

One interesting element of the evidence presented to the Copyright Board was a survey of the private copyright habits of Canadians. In 1999, when the Copyright Board issued its first decision on the subject, more than 90 percent of copies were made onto audio cassettes. However, there has now been a significant shift to recordable and rewritable CDs which now account for more than 75% while the share of audiocassettes has fallen to less than 20%. The overwhelming majority of private copies are now made using blank CDs.

The Decision also addressed various concerns regarding CPCC’s zero-rating program which is used to exempt certain persons or organizations from paying the private copying royalty. Such entities, which may include religious organizations, broadcasters, law enforcement agencies, courts, tribunals, court reports, provincial ministers of education, the Association of Universities and Colleges of Canada, music and advertising industries may apply for a certificate number allowing them to buy covered media levy-free from specified sellers.

One effect of the Decision is that it may legitimize certain aspects of peer-to-peer networks which are now heavily used to distribute music on the Internet. The Copyright Board stated that the private copying regime does not address the source of the copy (pre-owned recording, a borrowed CD or a track downloaded from the Internet) or whether the original has to be an authorized or noninfringing version. So according to the Copyright Board, users can legally make reproductions onto covered media for personal use of music downloaded from peer-to-peer networks such as Napster, Kazaa or Morpheus.

No tariffs were requested by the CPCC for computer hard drives and according to news reports quoting Claude Majeau, secretary general of the Copyright Board, “as far as computer hard drives are concerned, we say that for the time being, it is still legal.” Simply because the Copyright Board has not been asked to certify a tariff on hard disks in personal computers does not mean that private copies made onto such media infringe copyright. However, an audio recording medium to which no tariff applies because the Copyright Board has decided is not of a kind ordinarily used by individuals for recording music (such as DVDs) is removed from the ambit of the exemption.

It should be noted that not everyone shares in the view that downloading music is legal under Canadian law and ultimately it may be Canadian courts who will decide the issue. Also, the private copying regime only addresses the reproduction right. The Decision does not affect the current proceeding by Society of Composers, Authors and Music Publishers of Canada (SOCAN) before the Supreme Court of Canada regarding a royalty sought to be imposed against Internet Service Providers in respect of the “communication to the public by telecommunication” right which may be infringed by various intermediaries involved in the distribution of music on the Internet.

Note: The above appeared as a Bits & Bytes article published by Law Times on January 26, 2004.