Copyrights

• Author: International Law Group

Invoking the Canadian Copyright Act, the Society of Composers, Authors and Music Publishers of Canada (SOCAN) filed with the Canadian Copyright Board a proposed tariff that would apply to Internet transmissions of copyrighted music. The tariff sought to impose liability for royalties on Internet Service Providers (ISPs) for copyrighted music downloaded in Canada irrespective of whence the original transmission came. The Board approved the tariff. The Canadian Association of Internet Providers (CAIP), along with the United States Internet Industry Association and others challenged the tariff in court.

The Internet is a giant communications system involving a worldwide network of computers. Content providers upload their data, usually in the form of a Web site, to a host server which end users can access. End users look for the data available from content providers and the latter sends the requested data to the end users. Content providers and end users link up to the Internet with modems under contract with ISPs. End users may download musical works posted on host servers from anywhere in the world via the Internet. Usually, ISPs are neither aware of, nor control, the content of the files stored on their host servers. Contracts with providers, however, sometimes allow ISPs to review posted content and to remove infringing files.

ISPs may also operate "cache servers." Once an end user asks to access content on a Web site, the user's ISP forwards the content to the end user. The ISP may also store a temporary copy of the content on its cache server. The ISP may carry out its end users' next request for that content either from the copy posted on the original host server or from the ISP's cache server. It is undisputed that caching speeds up data transmission over the Internet and prunes transmission costs.

In dismissing SOCAN's tariff application, the Board reasoned that, to the extent that ISP's were merely electronic conduits, they benefitted from the exemption in Section 2.4(1)(b) of the Act. This provision exempts parties who only furnish the means of telecommunication from liability for infringing activity.

The Federal Court of Appeal generally upheld the Board as to the applicability of the exemption. However, in a 2-1 majority decision, it also held that where an ISP in Canada creates a "cache" of Internet material, even for purely technical reasons, it stops being a mere intermediary and becomes a content provider. [See preliminary...