Copyright Board Forced to Rethink Broadcasting Royalties

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COPYRIGHTBOARDFORCEDTORETHINKBROADCASTINGROYALTIES

LaurentCarrièreandIrinaDinu*
LEGERROBICRICHARD
,L.L.P.
Lawyers,PatentandTrademarkAgents
CentreCDPCapital
1001Square-Victoria-BlocE–8thFloor
Montreal,Quebec,CanadaH2Z2B7
Tel.(514)9876242-Fax(514)8457874
info@robic.com-www.robic.ca
PRECIS:TheFederalCourtofAppealofCanadahasgrantedanapplication
forjudicialreviewandsetasidetheCopyrightBoard’scertifiedtariffsofthe
royaltiespayablebycommercialradiostationsforbroadcasting.Justice
Evansgrantedtheapplicationonthegroundsthattheboardfailedto
provideadequatereasonsforitstariffs.
InCanadianAssociationofBroadcastersvSocietyofComposers,Authors
andMusicPublishersofCanadatheFederalCourtofAppealofCanadahas
grantedanapplicationforjudicialreviewandsetasidetheCopyright
Board’scertifiedtariffsoftheroyaltiespayablebycommercialradiostations
forbroadcasting.TheapplicationwassubmittedbytheCanadian
AssociationofBroadcasters(CAB),whicharguedthattheboard’sdecision
shouldbesetasidepursuanttoSection68(3)oftheCopyrightAct.
Theboardcertifiedtariffsestablishingtheamountofroyaltiespayableby
commercialradiostationsintheyears2003to2007totheSocietyof
Composers,AuthorsandMusicPublishersofCanada(SOCAN)andthe
NeighbouringRightsCollectiveofCanada(NRCC)(see
CopyrightBoard
rulesthatradiostationsshouldpayhigherroyalties
).Thetariffsaredueforthe
publicperformanceofmusicalworksandsoundrecordingsinwhich
membersofbothcollectingsocietiesholdrights,andarebasedona
percentageofthegrossannualadvertisingrevenuesofcommercialradio
broadcasters.
TheboardcertifiedageneraltariffforSOCANof4.2%andof2.1%forNRCC,
andrejectedthemodelsdeterminingtheappropriateroyaltyproposedby



















































©CIPS,2007.*Lawyerandtrade-markagent,LaurentCarrière,isaseniorpartnerwithLEGERROBIC
RICHARD
,L.L.P.,amultidisciplinaryfirmoflawyers,andpatentandtrademarkagents.Irina
Dinuisanarticlingstudentwiththefirm.PublishedinWorldCopyrightLawReport.
Publication328.029.

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CABandNRCC.Themethodusedbytheboardtodeterminetheroyalty
startedwiththeexistingtariffandadjusteditinlightoftheevidence
adducedbytheparties.Theboardsaidthatanincreaseinthetariffswas
warrantedonthreegrounds:
·theexistingtariffsunderestimatedthevalueofmusictoradiostations’
revenue;
·moremusicwasusedinbroadcasters’programming;and
·broadcasterswereabletotargetparticularaudiencesmoreefficiently
toincreasetheirrevenues.
TheCABchallengedtheestablishedtariffsbeforetheCourtofAppealon
twogrounds:thefailureoftheboardtoconsiderCAB’sobjections,and
inadequaciesinitsreasons.
CABarguedthattheboardfailedtotakeintoaccountitsobjections,namely
thattherehadbeenaproliferationinthenumberofrightsholderstobe
compensated.JusticeEvanswasoftheopinionthattheboarddidnoterrin
lawbyfailingtoconsiderarelevantfactor.Astothesecondgroundof
appeal,theboardhasastatutorydutytoprovidepartieswithadequate
reasons.‘Adequacy’istobeassessedinlightofthefollowingfactors:
enhancingthequalityofdecisions,assuringthepartiesthattheir
submissionshavebeenconsidered,enablingthedecisiontobesubject
toameaningfuljudicialreview,andprovidingfutureguidanceto
regulate[…]Equallyimportant,theadequacyofthereasonsmustbe
assessedincontext,includingtheagency’srecord,theissuestowhich
thereasonsrelate,andthescopeoftheagency’sexpertise.
Aboarddecisiononaroyaltyrateissubjecttojudicialreview,butonlyon
groundsofpatentunreasonableness.Eventhoughthejudgeconsideredthe
broaddiscretionoftheboard,hewasoftheopinionthatthegivenreasons
wereverythin.Thequantificationoftheundervaluationcannotbejustified
bymerelyreferringtotheevidencetakenasawhole.Theboarddidnotrefer
partiestoanythingintheevidencetoexplaintherange.Thus,itfailedto
explainthetariffs,whichisabreachofitsdutytoprovideadequatereasons
foritsjudgment.
Theinadequaciesoftheboard’sdecisionwarrantedthecourt’sintervention.
Theapplicationforjudicialreviewwasgrantedandthematterwasretuned
totheboardtoreconsidertheissues.

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