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Supreme Court Copyright Decisions
The Supreme Court of Canada issued five simultaneous and related rulings on July 12, 2012, that provided much-needed clarity on a wide range of copyright issues raised by new technologies. Among other things, the decisions reduced some royalties paid to songwriters and publishers and gave students a break on photocopying fees.
In the first case, some of Canada's biggest telecommunications companies had challenged the Society of Composers, Authors and Music Publishers of Canada (SOCAN) over royalties for streamed music services and the delivery of music downloads to customers. Canada's top court ruled for the telecoms that digitally downloading a song is no different that buying a recording at a music store. So while a royalty is paid to the artist and publisher for the copying of the song, SOCAN can no longer also collect a royalty for the transmission of the digital recording to the consumer.
The Copyright Board of Canada, which applies federal law and establishes copyright levies, had set a fee for music downloads, and the Federal Court of Canada had rejected an earlier industry application to review that position. The Supreme Court said individual transactions do not represent a public broadcast or performance of the song. In the same ruling, the court dismissed the industry appeal on fees for streaming servicesmusic offered to customers to listen to on cable channels, for example. The court ruled that performance royalties must continue to be paid on those services because they are public communications under the law.
In the second case, the court rejected SOCAN's appeal of a lower court ruling that royalties should not be paid on song previewsthe short clips that consumers can listen to when they shop online for music on iTunes and other sites. The Copyright Board ruled in 2007 that those music snippets did not infringe copyright.
In a third decision, the court ruled that video game publishers do not have to pay a communication or performance royalty to download games bought over the Internet. This ruling actually underpinned the court's position on distinguishing between streaming services and individual music downloads. Publishers already pay royalties for music used within games, but the court said the delivery of games by digital download is not a public performance and no additional royalty is necessary.
In two additional decisions, the court ruled that the Copyright Board must reconsider its position that students photocopying short excerpts from textbooks does not constitute fair dealing; and that broadcasters, cable companies, and cinemas should not have to pay royalties on works that they are showing or broadcasting.
Counsel are listed below for the first three cases.
For appellants/respondents Rogers Communications Inc. (Toronto), Shaw Cablesystems G.P. (Calgary), Bell Canada (Montreal), and Telus Communications Company (Burnaby, British Columbia)
Fasken Martineau DuMoulin:
Gerald Kerr-Wilson and associates Julia Kennedy and Ariel Thomas. (They are in Ottawa.)
For appellant/respondent Society of Composers, Authors and Music Publishers of Canada (SOCAN) (Toronto)
Gowling Lafleur Henderson:
Copyright: Gilles Daigle. Commercial litigation: Lynne Watt. Administrative law: associate Matthew Estabrooks. Appellate advocacy/regulatory law: Henry Brown Q.C. (They are in Ottawa.) Daigle has since left the firm to take an in-house position at SOCAN.
For appellant/intervenor ?CMRRA-SODRAC Inc. (Montreal)
Cassels Brock & Blackwell:
Entertainment law and intellectual property: Casey Chisick. Litigation: Tim Pinos and associates Jason Beitchman and Rebecca Hamovitch. (They are in Toronto.)
For intervenor Cineplex Inc. (Toronto)
Tim Gilbert. (He is in Toronto.)
For intervenor Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic (Ottawa)
University of Ottawa:
Jeremy de Beer and David Fewer. (They are in Ottawa.)
For intervenor/respondent Apple Canada Inc. (Markham, Ontario) et al.
Michael Koch. (He is in Toronto.)
For appellant Canadian Recording Industry Association
Osler, Hoskin & Harcourt:
Intellectual property: Glen Bloom. (He is in Ottawa.)
For intervenor Canadian Association of University Teachers
Litigation: Andrew Bernstein, Wendy Matheson, and associate Alexandra Peterson. (They are in Toronto.)
For intervenor Federation of Law Societies of Canada and the Canadian Legal Information Institute
IP litigation: Ronald Dimock and associate Sangeetha Punniyamoorthy. (They are in Toronto.)
For intervenor the Computer & Communications Industry Association
Andrea Rush, counsel John Morden, and associate Judith Parisien. (Rush and Morden are in Toronto; Parisien is in Ottawa.)
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TV Tax Decision
A decision by the Supreme Court of Canada late last year quashed plans by the country's broadcast regulator to allow TV stations to charge cable and satellite companies a fee for carrying their signals. Cable companies had warned that if implemented, the costs would almost certainly be passed on to consumers as a so-called TV tax.
In a 5-to-4 ruling on December 13, 2012, the court said that granting of pay-for-carriage rights falls outside the mandate of the Canadian Radio-television and Telecommunications Commission (CRTC). "Because the CRTC's value-for-signal regime is inconsistent with the purpose of the Copyright Act, it falls outside of the scope of the CRTC's licensing and regulatory jurisdiction under the Broadcasting Act," the court said.
The decision did not evaluate merits of a pay-for-carriage system, which proponents said could have long-term value for local TV by providing revenue for programming; it simply means that the issue is not within the CRTC's scope, and it's up to the federal government to implement such a policy.
Back in 2010, Canada's major private broadcastersCTV, and the former Canwest Television networkasked the CRTC to allow them to negotiate fee-for-carriage with cable companies. As traditional advertising models for local television became challenging, CTV parent Bell Canada and others saw fee-for-carriage as a revenue opportunity. The broadcasters said it was unfair that they provided free content for cable companies to sell.
After Shaw Communications Inc.the largest cable provider in Canadaacquired Canwest in late 2010, it immediately withdrew its support for the appeal. By the time of the ruling, Bell Media Inc. was the last remaining supporter of pay-for-carriage.
Before agreeing to the 2010 request, the CRTC asked the Federal Court of Appeal whether it had the mandate to allow such a move. The court gave the CRTC its blessing; the consortium of cable companies opposed the move and appealed to the Supreme Court of Canada.
For appellant Cogeco Cable Inc. (Montreal)
Neil Finkelstein, Daniel Glover, and Steve Mason. (They are in Toronto.)
For appellants Rogers Communications Inc. (Toronto) and Telus Communications Company (Burnaby, British Columbia)
Fasken Martineau DuMoulin:
Gerald Kerr-Wilson and Ariel Thomas. (They are in Ottawa.)
For appellant Shaw Communications Inc. (Calgary)
Davies Ward Phillips & Vineberg:
Litigation: James Doris, Kent Thomson, Sarah Weingarten, and associate Maureen Armstrong. (They are in Toronto.)
For respondents Bell Media Inc. (Toronto), Newfoundland Broadcasting Co. Ltd. (St. John's), and V interactions Inc. (Montreal)
Robert Malcolmson, Monique McAlister, Julie Rosenthal, Peter Ruby, and Benjamin Zarnett. (They are in Toronto.) Bell Media was formerly CTV Globemedia Inc.
* * * * * *
Teva Canada v. ?Pfizer Canada
The Supreme Court of Canada sent a clear signal to big pharmaceutical companies on November 8, 2012, saying that they shouldn't expect legislative protection if they don't play by the rules. In a unanimous 7-to-0 ruling, the court invalidated Pfizer Canada's monopoly on impotence drug Viagra and opened the door for a generic offering.
Under Canadian law, pharmaceutical companies can be granted a 16-year monopoly on new drugs, if they disclose how they made their discovery. The court essentially said Pfizer didn't keep up its end of the deal and so was not entitled to a monopoly under the Patent Act.
"Although (the act) does not specify a remedy for insufficient disclosure, the quid pro quo underpinning the act leads to the conclusion that deeming the patent invalid is the logical consequence of a failure to properly disclose the invention and how it works," the court said in its decision. "If there is no quidproper disclosurethen there can be no quo?exclusive monopoly rights."
Teva Canada Ltd., part of the Israeli-based pharma giant, had long sought to gain regulatory approvals to produce a generic version of the impotence drug Viagra, which was introduced in Canada in 1998; the patent was set to expire in 2014.
The litigation has been lengthy. In June 2009 the Federal Court of Canada issued a prohibition order against Teva Canada for the production of a generic version of Viagra. Teva's appeal of that decision was dismissed by the Federal Court of Appeal in September 2010, after which Teva appealed to the Supreme Court in April.
Teva argued that information within Pfizer's original patent application granted in 1998 listed several compounds but didn't specifically state ?that the active ingredient is sildenafil.
The court agreed and declared Pfizer's patent void.
Teva quickly produced a generic version of Viagra after the ruling.
For appellant Teva Canada Ltd. (Scarborough, Ontario)
Osler, Hoskin & Harcourt:
David Aitken and Marcus Klee. (They are in Ottawa.)
For respondents Pfizer Canada Inc. (Kirkland, Ontario) et al.
Andrew Bernstein, Yael Bienenstock, and Andrew Shaughnessy. (They are in Toronto.)
For intervenor Canadian Generic Pharmaceutical Association
Bill Mayo. (He is in Toronto.)
For intervenor Canada's Research-Based Pharmaceutical Companies
Gowling, Lafleur Henderson:
Patent law/appellate advocacy: Jane Clark and Patrick Smith. Appellate advocacy/regulatory law: Henry Brown, Q.C. (They are in Ottawa.)
* * * * * *
Goldsmith v. ?Poseidon et al.
Poseidon Concepts Corp. is an Alberta-incorporated corporation that develops and leases modular, insulated fluid-handling systems to oil and gas exploration companies. It is the successor of Open Range Energy Corp., a business that was quick to expand throughout North America, particularly across the United States. Poseidon soon gained a market capitalization of $1 billion.
However, following a series of corrective disclosures, Poseidon's share price plummeted by more than 95 percent. In particular, on November 14, 2012, Poseidon published its third-quarter results, which revealed problems concerning its accounts receivable and the adequacy of internal controls over its financial reporting.
Proposed class proceedings were filed in November 2012 in the provincial courts of Ontario, Alberta, and Quebec against Poseidon and some of its current and former officers and directors, and subsequent class actions were filed in February 2013 against National Bank of Canada, Poseidon's banker, and various financial institutions that underwrote Poseidon's January 2012 prospectus offering of shares. A similar suit has been filed in the United States.
After the class actions were commenced, some senior officers of the company were terminated or resigned. The company's shares are the subject of a cease-trade order issued by the Alberta Securities Commission.
For plaintiffs Marian Lewis, Franz Auer, Joanna Goldsmith et al.
Samy Elnemr and Dimitri Lascaris. (Elnemr is in Montreal and Lascaris is in London, Ontario.) Lewis is a plaintiff in the Quebec suit; Auer, in Alberta; and Goldsmith, in Ontario.
Jensen Shawa Solomon Duguid ?Hawkes:
Robert Hawkes. (He is in Calgary.)
For defendant Poseidon ?Concepts Corp.
Gowling Lafleur Henderson:
Robert Armstrong, David Bishop, Scott Kugler, and Julie-Martine Loranger. (Armstrong and Kugler are in Toronto; Bishop is in Calgary; and Loranger is in Montreal.)
For defendants National Bank of ?Canada and National Bank Financial Inc. ?(Montreal)
John Fabello, Sylvie Rodrigue, and James Tory. (All are in Toronto except for Rodrigue, who is in Montreal.) BMO Nesbitt Burns Inc., CIBC World Markets Inc., Haywood Securities Inc., Peters & Co. Limited, Canaccord Genuity Corp., Cormark Securities Inc., Dundee Securities Ltd., and FirstEnergy Capital Corp. are also named as defendants in the Ontario action.