The Supreme Court bans double royalties for streaming and downloading music online

Songwriters are entitled to only one royalty – not two – when their music is streamed or downloaded via an online service, the Supreme Court of Canada has ruled.

Friday’s Supreme Court decision highlights the importance of a Canadian copyright rule that deals with the publication of a work online to the public.

Canada introduced the provision after signing an international treaty that required member countries to protect on-demand broadcasts and grant authors the right to control when and how their works are made available for download or streaming.

The Copyright Board of Canada ruled that the statutory provision meant that the making available of a song or other artistic work was a separately protected activity for which remuneration had to be paid.

The board said this entitles rightsholders to two payments when a work is distributed online: one when it’s made available on a platform like iTunes or Spotify, and a second when it’s actually streamed or downloaded by a listener.

The Federal Court of Justice overturned the Chamber’s decision.

The Society of Composers, Authors and Music Publishers of Canada and Music Canada, which represents major record companies, petitioned the Supreme Court to set aside the Court of Appeals’ decision and accept the Chamber’s interpretation.

Parties including Apple Canada and major telecom companies said the court should reject that position on the grounds that copyright law does not require payment of two royalties each time a work is streamed or downloaded.

Writing for a Supreme Court majority, Justice Malcolm Rowe said copyright law does not exist solely for the benefit of authors.

“Its overarching purpose is to balance the rights of authors and users by ensuring authors fair rewards while making works more accessible to the public,” Rowe wrote.

“When this balance is reached, society is enriched. Authors are encouraged to produce more work, and users are given access to works to use to inspire their own original artistic and intellectual creations.”

The court said the chamber’s interpretation undermines the purpose of copyright law and violates the principle of “technology neutrality” by requiring users to pay additional royalties to access works online.

“This principle states that copyright law should not be construed to favor or discriminate against any form of technology unless there is a parliamentary intention to the contrary,” Rowe said.

“It protects creators and users by ensuring that works obtain the same rights and result in the same royalties, regardless of the technological means used to distribute the works.”

Copyright law gives authors rights related to the reproduction and performance of their works.

“Similar to offline distributions, downloading or streaming of works will continue to arouse only copyright interest and will require payment of a royalty — a reproduction license for downloads or a performance license for streams,” Rowe wrote.

By law, a work is “performed” once it’s made available for on-demand streaming, he added. A license fee is payable at this time. If the work is later streamed by a user, there is no additional royalty because the stream is part of an ongoing performance action that began when the work was made available.

The value of those rights was not at issue on appeal, Rowe noted. Therefore, it is up to the board to determine the appropriate royalties when these rights come into play.

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