No Royalties for SOCAN; File Sharing Legal

The Supreme court of Canada rejected the claim of the The Society of Composers, Authors and Music Publishers of Canada that Canadian Internet Providers should pay royalties because some of their customers download copyrighted works (SOCAN v CAIP). This follows another loss in which the Canadian Music industry tried to get the names of persons they alleged shared copyrighted mp3 files (CRIA v ISPs). In both cases the issues of “communication” and “authorization” along with balancing the rights of users and copyright holders were under discussion. The SOCAN v CAIP decision was clear: ISP’s are not liable for the file sharing activities of their users. However, there were some major screw-ups by the CRIA which lead to some interesting conclusions in the CRIA v ISPs case.

This case looked at the applicability of copyright legislation and the communication of music on Internet with SOCAN seeking to impose liability for royalties on Internet Service Providers. It also looked at whether or not the creation of “cache” copies of copyrighted works constitutes infringement. The case looked at the issues of communication and authorization as well as balancing the rights of copyright holders with the fair and private use rights of users.


When looking at whether or not ISPs as a means of transport are liable for what their users do the court found that communication is between the host and the recipient, not ISPs that merely facilitate that communication.

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.

When SOCAN argued that caching was a violation of copyright the court concluded:

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, and should not, when undertaken only for such technical reasons, attract copyright liability.


An internet service provider’s knowledge 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.

Balancing Rights:

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.

In contrast to the SOCAN v CAIP decision there were several elements in the CRIA v ISPs decision that were interesting. There were four major elements concerning the communication of copyrighted works in this case: reproduction, authorization, distribution, and possession.

Reproduction & Possession

In this case the CRIA sought the names of users who were file sharing copyrighted works from various ISPs. The court found major problems with the case, specifically that there was no evidence of infringement of copyright. Concerning reproduction, the Judge cited Section 80 (1) of the Copyright Act:

80. (1) Subject to subsection (2), the act of reproducing all or any
substantial part of (a) a musical work embodied in a sound recording, … onto an audio recording medium for the private use of the person who makes the copy does not constitute an infringement of the copyright in the musical work, the performer’s performance or the sound recording.

This makes clear sense for making personal copies, but the text of the decision concludes “Thus, downloading a song for personal use does not amount to infringement.”. This is in reference to the Copyright Board of Canada, Private Copying 2003-2004 which does not address liability concerning peer-to-peer distribution.

In these proceedings, the liability of persons uploading, distributing or communicating music through these services [peer-to-peer networks] is not at issue. Nor is the liability of those providing software, operating networks or Internet connections.15 Peer-to-peer distribution on the Internet is not addressed as such in the regime.

It seems that the issue concerns the origin of the copy:

The regime does not address the source of the material copied. There is no requirement in Part VIII that the source copy be a non-infringing copy. Hence, it is not relevant whether the source of the track is a pre-owned recording, a borrowed CD, or a track downloaded from the Internet.

Thus it IS an infringing act if you copy a CD and give it to your friend, but it is not an infringement if your friend borrows a CD and makes a personal copy. Therefore in the case of reproduction, it is not clear whether or not the music files in question were legitimately made for private use (or not). Another scenario: you purchase an mp3 legitimately — but lend it out to someone (perhaps via a file sharing tool) who then makes a private copy.

Things were further complicated by the fact that the CRIA hired a company, MediaSentry Inc.,to those suspected of file-sharing copyrighted works. But the testimony of the President of the company, Gary Millin, was ruled to be largely “hearsay” based on information from his employees over which he had “general oversight”. The Judge stated that “At the very least, Mr. Millin should have identified the employees who conducted the work, stated their qualifications and explained how they conveyed the result of their investigations to him.”

Furthermore, the same company flooded various P2P networks with bogus mp3 files and did not distinguish between those files and the ones they suspected users of sharing:

Mr. Millin also testified that his company provided a service called MediaDecoy which distributes bogus or inoperative files over the internet. People downloading these files think incorrectly that they are music files. The files are made to look like real music files, but they are inoperative. When he was asked whether he could tell whether any of the files allegedly copied from the alleged infringers were MediaDecoy files, Mr. Millin stated that he had not listened to any of the files copied from the alleged infringers and that listening to the files was not work that his firm was contracted to do or the “process that we set up with CRIA”.

So the CRIA could not prove that there were any copyrighted works being shared. Secondly they could not convince the Judge that they had gathered enough evidence to find out who was doing the file-sharing. The CRIA and Mr. Millin also appeared to confuse the Judge with regard to pseudonyms and IP addresses.

There is no evidence explaining how the pseudonym �Geekboy@KaZaA� was linked to IP address in the first place. Without any evidence at all as to how IP address has been traced to Geekboy@KaZaA, and without being satisfied that such evidence is reliable, it would be irresponsible for the Court to order the disclosure of the name of the account holder of IP address and expose this individual to a law suit by the plaintiffs.

The pseudonym is largely irrelevant, any user can make or change their pseudonym whenever they want to what ever they want– it does not impact the fact that ultimately the transmission of the mp3 is from one IP address to another. This can be easily demonstrated with a packet sniffer. Thus the fact that the user had a pseudonym is irrelevant and only serverd to further confuse the matter.

Distribution & Authorization

Concerning the actual sharing of files, the Judge ruled that this was not the same as distribution.

No evidence was presented that the alleged infringers either distributed or authorized the reproduction of sound recordings. They merely placed personal copies into their shared directories which were accessible by other computer user via a P2P service.

As far as authorization is concerned, the case of CCH Canada Ltd v. Law Society of Canada, 2004 SCC 13, established that setting up the facilities that allow copying does not amount to authorizing infringement. I cannot see a real difference between a library that places a photocopy machine in a room full of copyrighted material and a computer user that places a personal copy on a
shared directory linked to a P2P service. In either case the preconditions to copying and infringement are set up but the element of authorization is missing.

Balancing Rights

First the CRIA made a request for documents (connecting the IP adress with a user) that do not exist. The ISP’s would have to create them specifically to comply with a disclosure order. the “Rule” under which the CRIA applied for the documents “233 is to compel the disclosure, but not the very creation of documents.” Beyond that, the ISPs testified that although they could create such documents “the older the information, the more unreliable the result that will be” and that although they can ultimately produce the name of the account holder likely to have been assigned a particular IP address at a particular time “that account holder could be an institution and/or may be linked to a local area network of many users.” Since the CRIA waited months before initiating the disclosure proceedings the Judge ruled that:

Under these circumstances, given the age of the data, its unreliability and the serious possibility of an innocent account holder being identified, this Court is of the view that the privacy concerns outweigh the public interest concerns in favour of disclosure.

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