CRIA Responding Factum-June 13

8/6/2019 CRIA Responding Factum-June 13

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SCC File No. 33800IN T H E S U P R E M E C O U R T O F C A N A D A ( ON A P P E A L F R OM T HE F E D E R A L C OU R T OF A P P E A L)

BETWEEN:S OC I E T Y OF C OM P OS E R S , A U T HOR S A N D M U S I C P U B L I S H E R S O F C A N A D A APPELLANT

ANDB E L L C A N A D A , C A N A D I A N R E C O R D I N G I N D U S T R Y A S S O C I A T IO N ,A P P L E C A N A D A I N C . , R O G E R S C O M M U N I C A T IO N S I N C . , R O G E R SWIRELESS PARTNERSHIP, SHAW CABLESYSTEMS G.P., TELUSCO M MU N ICA TIO NS INC. , CM R R A /SO D R A C INC . , ENTER T A INMEN TSOFTWARE ASSOCIATION, ENTERTAINMENT SOFTWAREA S S O C I A T IO N O F C A N A D A RESPONDENTSAN DSAMUELSON-GLUSHKO CANADIAN INTERNET POLICY ANDPUBLIC INTEREST CLINIC, CANADIAN ASSOCIATION OFUNIVERSITY TEACHERS, FEDERATION OF LAW SOCIETY OFCANADA, CANADIAN LEGAL INFORMATION INSTITUTE,C O M P U T E R & C OM M U N I C A T ION S I N D U S T R Y A S S OC I A T ION

INTERVENORSR E S P O N D E N T ' S , C A N A D I A N R E C O R D I N G I N D U S T R Y A S S O C I A T I O N F A C T U M

O S L E R , H O S K IN & H A R CO U R T L L PSuite 1900, 340 Albert StreetOttawa ON K 1R 7Y6Glen A. BloomMarcus KleeTel: (613) 235-7234Fax: (613) 235-2867E-M ail: gbloom@ osler .com mldee@osler .com Couns el for the Respondent, CanadianRecording Industry Associa tion

O SL ER , H O SKIN & H A R CO U R T L L PSuite 1900, 340 Albert StreetOttawa ON K 1R 7Y6Patricia J. WilsonTel: (613) 787-1009Fax: (613)235-2867E-M ail: pwilson@ osler .com Agent for Co unsel for the Responden t,Canadian Rec ording Industry Association

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T H E R E G I S T R A R O F T H ES U P R E M E C O U R T O F C A N A D AG O W L I N G L A F L E U R H E N D E R S O NL LP160 Elgin Street, Suite 2600Box 466 Station AO tt awa ON K1P 1C3M ar tin W. MasonTel: (613) 786-0159Fax: (613) 788-3451E-mail: m artin.mason@ gowlings.com Coun sel for the Appellant, Society ofAuthors and M usic Publishers of C an a d aF A S K E N M A R T I N E A U D U M O U L INLLP55 M etcalfe Street, Suite 1300Ottawa ON K 1P 6L5Ger ald L. (Jay) Kerr -WilsonTel: (613) 236-3882Fax: (613) 230-6423E-mail: [email protected] Coun sel for the Respondents, Bell C an a d a ,Rogers C omm unications Inc. , RogersW ireless Partnership, Shaw CablesystemsG.P. , and Telus Comm unications Inc.G O O D M A N S L L P333 Bay Street, Suite 3400Toronto ON M5H 2S7Michael KochTel: (416) 597-5156Fax: (416) 979-1234E-mail: [email protected] Coun sel for the Responden t, Apple CanadaInc.

N E L L I G A N O ' B R IE N P A Y N E L L P50 O'Con nor Street, Suite 1500Ottawa ON K 1P 6L2Dougald E. Brow nTel: (613) 231-8210Fax: (613) 788-3661E-m ail: dougald.brown@ nelligan.ca Agent for Co unsel for the Respondent,Apple C an ada Inc.

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C A S S E L S B R O C K & BLACKWELLLLP2100 Scotia Plaza, 40 King Street WestToronto ON M5H 3C2Casey M . ChisickTel: (416) 869-5403Fax: (416) 644-9326E-mail: [email protected] Counsel for the Respondent,CMRRA/SODRAC Inc.M C C A R T H Y T T R A U L T L LPBox 48, Suite 5300Toronto Dom inion Bank TowerToronto ON M 5K 1E6Barry B. SookmanTel: (416) 601-7949Fax: (416) 868-0673E-mail: [email protected] Counsel for the Respondents, EntertainmentSo ftware Association and EntertainmentSo ftware Association of CanadaUNIVERSIT D'OTTAWACentre for Law , Technology andInnovati o n(CIPPIC)57 Louis Pasteur StreetO ttawa ON K1N 6N5David FewerTel: (613) 562-5800 Ext: 2558Fax: (613) 562-5417E-Mail: D avid.Fewer@ uOttawa.ca Couns el for the Intervener, Samuelson-Glushko C anadian Internet Policy an d Public Interest C linic

M CM IL L A N L L P50 O'Con nor Street, Suite 300Ott awa ON K1P 6L2Eugene Meehan, Q.C.Tel: (613) 232-7171Fax: (613) 231-3191E-mail: [email protected] Agent for Coun sel for the Respondent,CM RRA/SODRAC Inc.C A V A N A G H WILLIAMS CONWAYBAXTER LLP1111 Prince of W ales Drive, Suite 401O tt awa ON K2C 3T2Colin S. BaxterTel: (613) 569-8558Fax: (613) 569-8668E-mail: [email protected] Agent for C ounsel for the Respondents,Entertainment So ftware Association andEntertainment So ftware Associa tion ofC an ada

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TORYS LLP79 W ellington Street W est, Suite 3000Box 270, TD CentreToronto ON M5K 1N2Wendy M athesonAndrew BernsteinTel: (416) 865-0040Fax: (416) 865-7380E-Mail: [email protected] Coun sel for the Intervener, Can adianAssoc iation of University TeachersD I M OC K S T R A T T ON20 Q ueen Street W est, Suite 3202Box 102Toronto ON M5H 3R3Ronald E. Dimo ckTel: (416) 971-7202Fax: (416) 971-6638E-mail: rdimock@ dimock.com

Coun sel for the Intervener s, Federation ofLaw S ocieties of Canada andCanadianLegal Inform ation InstituteHEENA N BLAIKIE LLP333 Bay Stre et, Suite 2900Toronto ON M5H 2T4Andrea Rush / B rad Elberg /Charlene LipchenTel: (416) 360-6336Fax: (416) 360-8425E-mail: [email protected] /[email protected] / [email protected] Counsel for the Intervener, Computer andCom munications Industry A ssociation

O SL ER , H O SKIN & HARCOURTLL PSuite 1900, 340 Albert StreetOttawa ON K1R 7Y6Patricia J. WilsonTel: (613) 235-7234Fax: (613) 235-2867E-M ail: pwilson@ osler .com Agent for Co unsel for the Intervener,Canadian Assoc iation of U niversityTeacherM A C E R A & JARZYNA427 Laurier A venue W est, Suite 1200Ottawa ON K1R 7Y 2John S. MaceraTel: (613) 238-8173Fax: (613) 235-2508E-mail:j ohn.macera@ macerajarzyna.com Agent for Co unsel for the Interveners,Federation of Law So cieties of C anadaand Canadian L egal Information InstituteHEENAN BLAIKIE LLP55 M etcalfe Street, Suite 300Ottawa ON K1P 6L5Sylvain Rouleau

Tel: (613) 236-1668Fax: (613) 236-9632E-mail: [email protected]

Agent for C ounsel for the Intervener,Computer andCom munications IndustryAssociation

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PART ITATEMENT OF FACTSA . OverviewB . CRIAC . Online Music Services and PreviewsD . The Board D ecisionE. The Federal Court of Appeal D ecisionF. The Imp lication of the Decisions of the Board and the Federal Cou r t ofAppealPART IIOINTS IN ISSUEPART IIITATEMENT OF ARGUM ENTA . Standard of ReviewB . The Construc tion of the Copyright ActC . The Services do not Conduct Research6D . Whose Purpose M ay be Relied Upon7E. Consumers and Research0F. Was the Dealing Fair?2PART IVUBM ISSIONS REGARDING COSTS3PART VRDER REQU ESTED3PART VIABLE OF AU THORITIES5

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P A R T I S T A T E M E N T OF F A C T SA.verview1. This appeal is from a decision of the Federal Cou rt of A ppeal dismissing theAppe llant's ("SOCA N") application for judicial review of a decision of the Copyr ight Board ofC anada (the "Board") concerning a proposed SOCA N copy r ight tariff.2. The Bo ard com m itted a breach of natural just ice in raising, anddeciding on itsown , the application of the fair dealing exception to the use of preview s of musical wo rks. Thebreach arose because the Bo ard in effect denied the pa rties the opportun ity to lead evidence and m ake subm issions on the issue of fai r dealing. This Cou rt must consider whether the FederalCour t of Appeal was cor rect in its review of the Board's decision.3. The C anadian R ecording Industry Association ("CR IA") submits that the FederalC ourt of Appeal com m itted three errors o f law. Firs t , it gave effect to the purpose of the use ofpreviews f rom the perspec t ive of consum ers who l is tened to the p reviews, andnot f rom theperspec tive of the commercial services who used the previews to increase their sal e ofdownloads of sound recordings of m usic al works. Second, the Federal Cou r t of Appeal err ed inconc luding, in the con text of the fair dealing excep ti on, that consum er's shopping activities inseeking andinding a sound r ecording of a m usical work to purchase co nst ituted "research".Third, the Federal Co u rt of Ap peal failed to take into acco unt the effect of the Ser vice's dealingon the previews. Each of the Federal Court of Ap peal's findings on these issues is contrary to thethree step test andputs C an ada in breach o f its obligations under Article 13 of the agreem ent onT rade-R e la ted A spec ts o f In te l lec tual Proper ty R igh ts , Inc lud ing T rade in Coun terfe i t Go ods ( t h e"TRIPS Agreement").4. CR IA subm its that , as a result of the errors c om m itted by the Federal Co u rt ofAppeal, this appeal should be allowed.B. CRIA5.RIA is a not-for-profit corporation that prom otes the objectives of the Canadianrecord industry. CRIA's members create, promote, market and distribute recorded music.OTTAWA: 1600938.6


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CRIA's m embers are major con tr ibutors of Canadian content and actively seek out and nurtureCanadian talent, which they market to the world.

Coalition Statement of Case, para 18; Appel lant 's Recor d, p 1826RIA was on e of the objectors who filed evidence before the Board c hallengingthe proposed royalties sought by SOCAN pursuant to a Tariff filed in accordance withsubsections 67.1(2) of the C o p y rig h t A c t (the "Act"), for the years 1996-2006 entitled "Statemen tof Royalties to be Collected by SOCAN for the communication to the Public byTelecomm unication, in C anada, of Musical or Dram atic-Musical Works" ("Tariff 22.A").

Co al ition Statement of C ase, para 1; Appel lant's Re cord, p 179C.nl ine M usic Serv ices and Preview s7. The respondents Bell Canada, Rogers Com mun ications Inc. , Rogers W irelessPartnersh ip , Shaw C ablesystem s G.P. , Telus Co m m unicat ions Inc . and Apple Canada Inc .operate services that enable consum ers to purchase sound recordings of m usic al works over theInternet . The respo ndents andothers wh o op erate such ser vices (collect ively the "Services")supply the sound recordings to consum ers by perm i tt ing consum ers to download the soundrecor dings offered on their websites.

Appellant's Factum, dated April 18, 2011 ("SOCAN Factum "), para 1 38. As a marketing tool for the sale of sound recordings, Services make previews ofsound r ecor dings available on their websites for con sum ers to listen to andhelp them decidewhether to purch ase the sound recordings ("Previews"). Previews are usually 30 seconds or lessexcerpts of sound recordings.

Reasons for Decisions of the Copyright Board, dated October 18, 2007("Board Decision"), para 18; Appellant's Record, p 14

D.he Bo ard Dec is ion9. In its decision, the Board certified Tariff 22.A for the communication of musicalworks to the public by telecommunication through on-demand streams and limited and perm anent downloads.OTTAWA:1600938.6


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Copyright Board, Statement of Royalties to be Collected by SOCAN for theCommunication to the Public by Telecommunications, in Canada, ofMusical or Dramatico-Musical Works, Tariff 22.A: Internet-Online MusicServices (1996-2006) ("Tariff 22.A") , sect ion 3; Appel lant's Record, p 5

10. Non e of the par ties before the Boar d claimed that the exception for fair dealingapplied to the Previews. Nev ertheless, the Bo ard ruled on the fair dealing excep tion w ithoutputt ing the parties on notice or allowing the par ties an oppor tunity to lead evidence or to m akesubm issions on the issue.

Board D ecision, para 102; Appel lant's Recor d, p 3911. In its reasons for c ertifying Tariff 22.A, the Board c oncluded that users who listento Previews w ere entitled to avail themselves of the exception for fair dealing under section 29 ofth e A c t . The Board concluded that listening to Previews constituted "research" and that Previewsassisted users in planning the purchase of a dow nload of a sound rec ording.

Boar d Decision, paras 109 and 116; Appel lant's Record, p 42 and 4412. In reliance on the decision of this Cour t in C C H C a n a d ia n L t d . v . S o c i e ty o fU p p e r C a n a d a (" C C H ") , the Board co ncluded that "streaming a preview w ith a view to decidingwhether or not to purch ase a download" was for the purpose of research.

Board Decision, para 109; Appel lant's Re cord, p 4213. Although the Board decided that Services that supply Previews do not co nductresearch, the Board foun d that they supply Previews to facilitate the "research" of c onsum ers .The B oard focused i ts analys is on the purpose of the consum ers in l is ten ing to previews and attributed the consumers' purpose to the Services in reliance on the C C H decision.

Board Decision, paras 108,109 and 112; Appel lant's Record, p 41-4314. The Board then applied the six fair dealing factors outlined in CCH to thecircumstances anddecided that the com mun ication of Pr eviews was fair dealing. With respec t tothe first factor (the purpo se of fair dealing), the Board co ncluded that the purpo se of the dealingwas for the purpose of research.

Board Decision, para 111; Appellant's Record, p 42-43

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15. With respec t to the third fair dealing factor (the amo unt of the dealing), the Boardconc luded that the amount of the dealing was mo dest. Previews are generally 30 seconds or less.

Board Decision, para 113, Appellant's Record, p 4316. W ith respect to the fifth and six factors (the nature of the work and the effect ofthe dealing of the wo rk, respectively) the Board stated:

[115] The last two factors are the nature of the work and theeffect of the dealing on the w ork. M usic al downloads offered byservices are objects of comm erce. Anything that is done to increasethe profitability of sales accords with the nature of the work.Offering previews encourages sales of down loads, which in turnsbenefits copyright own ers.Board Decision, para 115; Appellant's Record, p 43

17. Based upon the eco nom ic evidence and argume nts before it, the Board establisheda royalty rate that did not include an increm ental amount for Pr eviews. The Board c oncluded thatServices that pro vide Previews "usually can avail themselves of the fair dealing exception".

Board Decision, para 159; Appellant's Record, p 55-56E.he Federa l C ourt of Appea l Decision18. Before the Federal Court of Appeal, CRIA claimed that SOC AN's application forjudicial review was m oot because it would have n o practical effect on the r ights of the parties ,nam ely, the Boar d separately decided i t wo uld not adjust the roy alty rate for Previews basedupon i ts econom ic analysis . CRIA c laim ed that SOCA N had sou ght judicial review only of alegal issue and did not challenge the Board's findings on the econom ic value of Previews.19. All of the parties before the Federal Court of Appeal pro tested the Board's denialof their oppo rtuni ty to m ake subm issions o n the scope of the fa ir deal ing except ion. C RIAclaimed that the Board 's failure to hear the parties on the legal question co nstituted a breach ofprocedura l fa i rness and the parties ' r ight to be hear d. CRIA advised the Court that it did notaccept the conc lusion of the Board on fair dealing, andf it had been invited to do so , it wouldhave argued against the Board's conclusion.

SOCAN v Bell Canada, 2010 F.C.A. 123 (the "FCA Decision"), para 10;Appel lant's Record, p 80OTTAWA:1600938.6


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20. The Federa l Court of App eal expressed surp rise that the Board h ad reached aninterpretation of fair dealing without the benefit of discussion w ith the pa rties. The Court agreedthat the parties should have been heard, imp liedly acknowledging that there had been a breac h ofnatural justice. The C ourt then hear d the parties on the interpre tation of fair dealing and, at thehearing, permitted SOCA N to subm it confidential figures that were not before the Board becausethe parties had not been called upon to discuss or subm it evidence on fair dealing.

FCA Decision, paras 10, 11 and 25; Appellant's Recor d, p 80-81 and 8521. The Federal Court of App eal affirm ed the Boar d's decision finding that the use ofPreviews c onst i tuted fair dealing. It found that the Bo ard's interpretat ion o f research was n otunreasonable or in error. It accepted the Board's analysis of 5 of the 6 fair dealing factorsoutlined in CCH andmer ely comm ented on the third factor relating to the amoun t of the dealing.The Court con cluded that the Boar d's decision that the dealing was fair was not unr easonable orin er ror . In effect, the Co urt cons idered the issue of fair dealing de novo andreached its decisionon a standard of corr ectness.

FCA Decision, paras 10, 20, 23 and 24 to 31; Appellant's Record, p 80, 83,85-8722. With respect to the construction of research , the Cou rt stated:

[20] In that con text , i t wo uld be unreaso nable to give the word"research" its primary andrdinary meaning. The consumer issearching for an object of copyr ight that he or she d esires andsattempting to locate andishes to ensur e i ts authenticity andquality before obtaining it. I agree with the B oard that "[l]isteningto pr eviews assists in this investigation".FCA Decision, para 20; Appel lant's Re cord, p 83

23. With respect to wh ose purpose the research must be for fair dealing to apply, theC ourt stated:

[22] SOC AN argues that the primary purpo se of previews is notresearch, but rather increased sales and, accordingly, increa sedpro fi ts . Ther e is no do ubt that , for the sel ler , this is an importantobjective, one which also benefits copyright holders throughreproduc tion and pe r fo rm ance rights. I agree. But this does notexclude other equally important purposes. We must considerOTTAWA:1600938.6


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previews from the point of view of the person for who m they arein tended: the consu m er of the subjec t -mat ter of the copyright .Their purpo se is to assist the consum er in seeking and finding thedesired musical work.FCA Decision, para 22; Appellant's Record, p 84

24. CRIA submits that the Board andthe Cou r t below erred in construing research inthe context of fair dealing in section 29 of the A c t, in concluding that the purpose of the Previewsmust be considered f rom the poin t of view of the consumer andin con cluding that the dealingwith Previews was fair.F .he Implication of the Decisions of the Boar d and the Federal C ourt of A ppeal25. The decisions of the Board an dhe Federal Court of Appeal have broadapplicat ion beyond the facts in this case. CRIA 's mem bers are m akers of sound r ecordings ofm usical works. They are entitled to the exclusive right of reproduc tion in their recordings. Thisr ight includes the r ight to reproduc e Previews. In addition, together w ith per form ers, CR IA'smember makers have a right of equitable remuneration for the public performance and com mun ication to the public by telecomm unication of their published sound reco rdings.

Copyright Act, RSC 1985, c C-42 ("Copyright Act"), sections 18(1)(b) and19(1); Appel lant's Authorit ies Vo lume III , Tab 1626. The decisions of the Board and the Federal Cou rt of Ap peal on fair dealing willimpa ct maker s of sound rec ordings in negotiations for the exploitat ion of their repro ductionrights andany steps that m akers of sound reco rdings andperform ers m ay take to collectivelyadm inis ter their r ight of equi table rem unerat ion. The dec is ions below w ill a lso have broadimplication on copyright owners o f works other than m usic al works that are used for "research"purposes.

PART II POINTS IN ISSUE27. W hether in applying fair dealing, the purpose to be co nsidered is the purpose ofconsum ers in l istening to Previews or the purpose of S ervices in comm unicating Previews toconsum ers. CRIA subm its that the purpose m ust be that of Services.

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728. Whether the pur pose of consum ers l istening to Previews is "research" within them eaning of section 29 of the A c t. CRIA submits that the purpose is not res earch.29. Wh ether the comm unication of Previews is fair. CRIA submits that it is not fair.30. As a resu lt, CR IA subm its that the fair dealing exception und er section 29 of theAct does not apply to Previews andthat therefore this appeal must be allowed.

P A R T I II S T A T E M E N T O F A R G U M E NT31. Section 29 provides for fair dealing for research an d private s tudy. The sectionreads as follows:

29. Fair dealing for the purpo se of researc h or pr ivate s tudy doesnot infringe copyrig h t .Copyright Act section 2 9 ; Appellant's Authorities Volume III, Tab 1 6

32. CRIA agrees wi th SO CA N that the comm unica tion of Previews i s not fo r thepurpose of research and that the com munication of Previews is not fair.

SOCAN Factum, paras 3 9 an d 4 0A .tandard of Rev iew33. The Copyright Board raised s u a sponte the issue of wh ether the fair dealingexception applied to previews, andthen proc eeded to decide the issue without hearing from theparties.

FCA Decision, paras 10 - 1 1 , 2 5 and 2 9 - 3 0 ; Appellant's Record, p 80-81and8 5 - 8 6

Parry Sound (D istrict) Social Serv ices Adm inistrat ion Board v O .P.S.E. U .,Local 324, 2003 SCC 42, paras 5 9 - 6 1 and 70; Respondent/CR IA Authorit ies("CRIA Authorities"), Tab 9

34. The standard of review by the Federal Court of Appeal of the Board'sinterpretation of the meaning of "research" and wh ether the purpose o f the person providing thecommunication or the purpose of the person receiving the communication governs, iscorrec tness . E xisting ju risprudence of this Court states that the Board's interpretations of

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provisions of the Act which are of general applicati on are reviewable on a standard ofcorrectness.

D u n s m u i r v . N e w B r u n s w i c k , 2008 SC C 9, [2008] 1 S.C.R. 190, paras 34, 55,57 and 64; CRIA Autho rities, Tab 4S O C A N v C a n a d ia n A s s o c i at io n o f I n t e rn e t P ro v i d e r s (2002), 19 C.P.R. (4th)289 (F.C.A.) at para 36; aff 'd (2004), 32 C.P.R. (4 th )1 (S.C.C.) at para 3 5 ;CRIA Autho rities, Tab 13

35. The excep tion for fair dealing in section 29 of the A c t is of gener al application. Itis not a matter that is within the expe r tise of the Boar d. The general applicat ion of the fairdealing exception is i llustrated by the decision of this Co ur t in CCH. In CCH, an ac ti on forinfr ingement of co pyright, one o f the centr al issues in the action was the applica ti on of the fairdealing excep tion. This C ou r t opined on the fair dealing excep t ion and the application of fairdealing to the facts in C C H .

C C H C a n a d i an L t d v L a w S o c i e t y o f U p p e r C a n a d a , 2004 SCC 13, [2004] 1S.C.R. 339 ("C C H 2004") , para 51; Appellant 's Authorities Volume 1, Tab536. The standard of rev iew of the Federal Co urt of Appeal , an dthe Board, of theconstruct ion of "research" in sect ion 29 of the Act andwhether the purpo se to be considered isthat of consum ers l istening to Previews or that of Services comm unicating the Previews m usttherefore be correctness. A correctness st andard is also ap plicable because by failing to allow theparties an oppo rtunity to be heard, the Bo ard breac hed the principles of natural justice. TheFedera l Cou r t of Ap peal therefore r eviewed the Board 's decision on a corr ectness basis . TheSupreme Cou r t of C anada, upon reviewing the decision of an interme diate appellate cour t , is todetermine if the standard of review w as correc t ly determined by the Cou r t below, andthen todecide "whether the standard of review w as applied correc tly" by the Cou r t below. In "practicalterm s", this means that this Cour t itself review s the tribun al decision on the correct standard ofreview.

P r a ir ie A c i d R a i n C o a l it i o n v C a n a d a (M i n i s t e r o f Fi s h e r i e s a n d O c e a n s ) ,2006 FCA 31, paras 13-14; CRIA Autho rities, Tab 10Z e n n e r v P ri n c e E d w a r d I s l an d C o l l e g e o f O p t o m e t r i s ts , 2005 SCC 77, [2005]3 S.C.R. 645, paras 29-45, per Major J . ; CRIA Autho rities, Tab 14

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9Canada R evenue Agency v. T elfer, 2009 FCA 23, para 19 ; CRIA Authorities,Tab 1

37. CRIA subm its that both the Federal Cou rt of Appeal andthe Board were incorrectin their cons truct ion of research anderred in law in the selection of the purpose of co nsumerswho use Previews, and in ignoring an impor tant element of the test for fair dealing. In addition,the Court below and the Board err ed in fmding the Services' dealing with Previews was fair.B .he Construction of the Copyr ight Act38. CRIA subm its that a principled approach m ust be adopted in construing the fairdealing exception. The principled approac h m ust take into acco unt the object and purpose of theAct andCan ada ' s inte r n ational t reaty obligations. Bo th the Federal Co urt of A ppeal and theBo ard failed to adopt a principled appro ach in constr uing fair dealing. Neither the Cou r t nor theBoard referred to C anada's obligations under the TRIPS A greement n or applied the s ixth factorof the effect of the dealing of the wor k.39. This Cour t has affirmed the following approach to statutory co nstruction:

Today there is only one principle or approach, nam ely, the wordsof an Act are to be read in their entire context andn theirgrammatical andordinary sense harm oniously within the schemeof the A c t , the object of the A c t , and the intentions of Par liament.Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27, para 21; CRIAAuthorities, Tab 11T he O b ject of the Act

40. This Cou r t has stated the object of the A c t as follows:[30] The Copyright Act is usually presented as a balancebetween pro m oting the public interest in the encour agemen t and dissemination of wo rks of the arts andintellect andobtaining a justreward fo r the crea tor (o r , m ore accura te ly , to prevent someoneother than the creator from approp riating whatever benefits may begenerated). [...][31] The p rope r b alanceamon g these andother public policyobject ives l ies no t only in reco gnizing the creator ' s r ights but ingiving due weight to their limited nature. In crassly economicterms it would be as inefficient to overcompensate artists and

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authors for the r ight of reproduc ti on as it would be self-defeatingto undercom pensate them. Once an authorized copy of a work issold to a mem ber of the public, it is generally for the pur chaser, notthe author, to determine what happens to it .[32] Excessive control by holders of copy r ight andother formsof intellectual prop erty m ay unduly limit the ability of the publicdom ain to incorpora te and embel l ish c rea t ive innovat ion in thelong-term interests of society as a whole, or create practicalobstacles to pro per utilization. This is reflected in the excep ti ons tocopyr ight infringement enum erated in ss. 29 to 32.2, which seek toprotect the public dom ain in traditional ways such as fair dealingfor the purpose of cr iticism or r eview and to add new protection toreflect new technology, such as l im i ted com puter p rogramreproduc ti on and "ephem eral recordings" in connection with liveperformances.Thberge v. Galerie D'Art du Petit Champlain Inc., 2002 SCC 34, [2002] 2S.C.R. 336, paras 30 to 3 2; Appel lant's Authorit ies V olume 2, Tab 14

41. In CCH this Cour t directed courts to interpret the Act to st r ive to m aintain abalance between obtaining a just reward for cr eators andencouraging the dissemination of wor ksof the arts and intellect.

C C H 2004, para 10; Appel lant's Authorit ies Volume 1, Tab 542. As a result , the proper approach to the c onstruction of the Act is to focus upon aconstruct ion that achieves the appropr iate b alance. A large andliberal con struc t ion of the A c tthat unduly constrains the rights of owners o r users sh ould be avoided. In weighing the bal ance acou r t must also give consideration to Canada's obligations under the TRIPS Agreementdiscussed below. A co urt does not have an open ended discret ion in determining wher e thebalance lies.

(ii) he T R IPS Agreement

43. Can ada's abili ty to establish exceptions to the ex clusive r ights of co py r ight islimited by its inte rnational treaty obliga ti ons. The three s tep test, which or iginated in the B e r n eConvention, has now become the intern ational norm for defining the scope of copyrightexceptions. The three step test, in combination with the object and purp ose of the A c t, establishesa f ramework fo r cou r ts to apply in con struing the exception in the Act, including, in par ticular,the fair dealing exception.OTTAWA:1600938.6


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44. The three s tep test was first set out in the Berne Con vent ion as a limita tion on thescope o f perm issible exceptions to the r eproduction r ight. A r ticle 9(2) of the B e rn e C o n v e n t io nprovides as follows:

(2) It shall be a matter for legislation in the countries of theUnion to perm it the reproduction of such works in ce rtain specialcas es , provided tha t such reproduc tion do es not con f lic t wi th anormal exploitation of the work an does not unr easonablyprejudice the legitima te interests of the author.T he Berne Convention for the Protection of L iterary and Artistic W orks,1886("Berne Conv ention"), Article 9(2); Appellant 's Authorities Volume 3, Tab1 7

45. The three s tep test requires that the exception apply in special cases (firs t s tep),that the reproduction not con flict with a norm al exploitation of the work (secon d step) and thatthe reproduction n ot unreaso nably prejudice the legitimate interests of the author (third step).

G uide to the Berne Convention, paras 9.6 and 9.11; CRIA Authorities, Tab1 746. The TR IPS Agreem ent adopted the th ree s tep test wi th minor a l te ra t ions an d m ade i t applicable to exceptions to al l exclusive r ights of copy r ight. A r ticle 13 of the TRIPSAgreement set out the three step test in language drawn from Article 9(2) of the B e r n eC o n v e n t io n . Article 13 reads as follows:

M ember s shall confine limitations or exceptions to exclusive rightsto certain special cas es which do not conflict with a normalexploitation of the work anddo not unr easonably prejudice thelegitimate inter ests of the right holder.TRIPS Agreement, Article 13; CRIA Autho rities, Tab 19Sam Ricketson, "WIPO Study on Limitat ions and E xcept ions of Copyrightand Related Rights in the Digital Environment", Report to the StandingCommittee on Copyright and Related Rights in the Digital Enviro nment,WIPO Doc. SCCR/9/75 April 2003), online: WIPO, p 47;CRIA Authorities, Tab 2847. The TRIPS Agreement was adopted on April 15, 1994, as Ann ex IC of the

Agreem ent Establishing the W orld Trade Or ganization (the "WTO Agreem ent"). The TRIPSAgreem ent established standard s or m inimal levels of intellectual property pro tection, including

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copyr ight. Canada has adopted the TRIPS Agreem ent and is therefore bound by the provisions ofthat Agreement.

WTO Agreement, Preamble and List of Annexes; CRIA Authorities, Tab2 4Daniel Gervais, T h e T R I P S A g r e e m e n t : D ra f t in g H i s to r y a n d A n a l y s i s, 3 r ded., (Toronto: Sweet & Maxwell, 2008), ("Gervais TRIPS Agreement"),para 1.30; CRIA Author ities, Tab 26Myra J. Tawfik, "Is the WTO/TRIPS Agreem ent U ser-Fr iendly?" , F inalReport to the International Trade Treaties Committee of the CanadianLibrary Association (30 January 2005), online: Canadian LibraryAssociation , ("Tawfik") , p 8 and 28; C RIA Authorities,Tab 27W o r ld T r a d e O rg a n i z a t io n A g r e e m e n t I m p l e m e n t a t io n A c t , S.C. 1994, c. 47,pream ble and s . 56 to 69; CRIA Autho rities, Tab 23

48. The significance of the enshrinement of the three step test in the TRIPSAgreement is the fact that the WTO Agreement, unlike the Berne Convention, establishes am eans by which the obligations under the T R I PS A g re e m e n t can be enforc ed against contrac tings ta tes . This m echanism se t out in Annex 2 to the WTO Agreem ent is through a pro ceedingbrought before a p anel struck by the W orld Trade Or ganization (a "WTO Pan el").

G e r v ais TRIPS Agreem ent, para 2.119; CRIA Authorit ies, Tab 26Tawfik, p 8 and 9; C RIA A uthorit ies, Tab 27

49. The three step test has also been adopted in subsequent treaties established by theW orld Intel lectual Property Organization, andhas been adopted in a regional trade agreemen t(the North America Free Trade Agreement) which exten ded the three step test to exceptions inrelation to sound r ecordings.

W I P O C o p y r ig h t T r e a ty , Article 10; CRIA Authorities, Tab 21W I P O P e r f o rm a n c e s a n d P h o n o g r am s T r e at y , Article 16; CRIA Authorities,Tab 22N o r t h A m e r ic a n Fr e e T r a d e A g r e e m e n t , Article 1706(3); CRIA Authorities,Tab 18Taw fik, p 9; CRIA Autho rities, Tab 27

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50. The three step test is now the international norm for assessing exceptions tocopyright infringement. Professor Tawfik has stated:

W hatever the technical limits of the scope of A r ticle 13, it wouldappear to be only a matter of t ime before the "Three Step Test""becom es the prevail ing norm ative principle to which dom esticlegislators will turn in assessing the validity of existing orproposed copy r ight exceptions to exclusive r ights. Noted Bern escho lar , Sam Ricketson has c harac terized this ubiquitous test a shaving achieved `holy w rit ' s tatus . In fact, provisions em bodyingthe "Three-Step Test" are being included as a matter of course inall new trade andcopy r ight treaties such that it has becom e theguiding principle of choice within the inte rnational cop y r ig h tenvironmen t. [footnotes omitted]Tawfik, p 25; C R I A Authorities, Tab 27

51. The U.K. High Cou r t of Jus ti ce has adopted the three step test in its guidelines forfair dealing.

Fraser-W oodw ard L td. v. British Broadcasting Corp. , [2005] F.S.R. 36 (Ch.Div.) p. 793-794; C R I A Authorities, Tab 552. The three step test in Art icle 13 of the TRIPS A greem ent was con sidered by aW TO Panel in U n i t e d S t a t e s S e c t i o n 1 1 0( 5) o f t h e U . S . C o p y r ig h t A c t ( "U .S . Sec ti on 110(5)").The WTO P anel was consti tuted as a result of a request by the European Com mission regardingsection 110(5) of the U.S. Copyright Act which was enacted on October 27, 1998. Sec ti o n110(5) perm itted the playing of music on the r adio or over television in public places (includingbars and restaur ants) without com pensation for the owner of copyr ight in the music. In suppo r t ofsec ti on 110(5) the U nited States claim ed that the sec ti on c om plied with the standards establishedby A r ticle 13 of the TRIPS Agreem ent. The WTO P anel disagreed.

United States Copyright Act, sect ion 110(5); CR IA Authorities, Tab 20Gervais TRIPS Agreement, para 2.125 to 2.127; CR IA Authorities, Tab 26

53. In i ts general comm ents on A r ticle 13 of the TRIPS Agreement the WTO Panelstated that distinct mean ing had to be given to each o f the three con ditions of the thr ee step testand that the failure to com ply with any of the three con ditions w ould result in an excep tion beingdisallowed.

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WTO Panel, para 6.97; CR IA Authorities, Tab 2554. With respec t to the first condi ti on (that an exception be confined to certain specialcases) the WTO Panel concluded that an excep tion in nati onal legislation sho uld be clearlydefined andshould be narrow in i ts scope and reach. The P anel stated:

6.108 The ordinary meaning of "certain" is "known and particularised, but no t explicitly identified", "determined, fixed,not var iable, definitive, precise, exact". In other w ords, this termmeans that, under the firs t condi tion, an exception o r limitation innation al legislation m ust be clearly defined. However , there is noneed to identify explicitly each andvery po ssible situation towh ich the exception could apply, provided that the scope of theexception is know n andparticularised. This guaran tees a sufficientdegree of legal certainty. [footnotes omitted]6.109 We also have to give full effect to the ordinary m eaning ofthe second wo rd of the first condition. The term "special" connotes"having an individual or limited application or purpose","con taining details; precise, spec ific", "exceptional in quality ordegree; unusual; out of the ordinary" or "distinctive in som e way".This te rm m eans that mo re i s needed than a c lear def ini t ion inorder to meet the stan dard o f the fi rst cond ition. In addit ion, a nexception or limitation m ust be limited in its field of applica ti on orexception in i ts scop e. In other wor ds, an excep tion or limitationshould be narrow in quantitative as well as qu alitative sense. Thissuggests a narrow scope as well as an exceptional or distinctiveobjec tive. To put this aspect of the firs t condi tion into the contextof the second co ndition ("no conflict with a n orm al exploitation"),an excep tion or limitation sho uld be the opposite of non -special,i.e., a nor m al case. [footnotes om itted]WTO Panel, paras 6.108, 6.109 and 6.112; CRIA Authorities, Tab 25

55. With respect to the second c ondition (no conflict with a norm al exploitation of awork) the P anel considered what would con stitute a norm al exploitati on of a work with which aderogation in an exception was not supposed to con flict. It reached the following conc lusion:

6.183 We believe that an exception or limita tion to an exclusiveright in dom estic legislation r ises to the level of a con flict with anorm al exploitation o f the work (i .e. the copy r ight or rather thewhole bundle of exclusive rights conferred by the owner ship of thecopy r ight), if uses, that in pr inciple are cov ered by that right butexempted under the excep ti on o r l imi tat ion, enter into econom iccom pet it ion w ith the ways that r ight holders norm al ly ext rac tOTTAWA1600938.6


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economic value from that right to the wo rk (i.e., the copyright) andthereby deprive them o f significant or tangible com mer cial gains.W T O Pane l, paras 6.164, 6.165 and 6.183; CRIA Authorit ies, Tab 25

56. Finally, with respe ct to the third co ndit ion (no unreaso nable prejudice to thelegitimate interests of the right holder) the P anel first defined the interests of the r ight holder atstake and those attributes which m ade them legitimate. It then develop ed an interpretation of"prejudice" and the level of prejudice at which the prejudice becam e unreaso nable. The crucialquestion under the third con dition is the level at which the prejudice becom es unreason able. ThePanel identified this level as follows:

6.229 The crucial question is w hich degree o r level of "prejudice"may be con sidered as "unreasonable", given that , under the thirdcondi t ion, a cer ta in am ount of "prejudice" has to be p resum edjustified as "not reasonable". In our view, prejudice to thelegitimate interests of r ight ho lders reaches an unreasonable levelif an exception or limitation causes or h as the potential to cause anunreasonable loss of income to the copyright owner. [footnotesomitted]WTO Pane l, paras 6.222, 6.223, 6.224 and 6.229; CRIA Autho rities, Tab 25

57. This Court has held that a c ourt sho uld strive to interpret a statute in a way that isconsistent with C anada's international treaty obligations. The Federal Co u r t of Appeal and h eBoard sh ould therefore have con sidered the fair dealing exception having regard to the three steptest. Beca use of Can ada's obligations under the TR IPS Agreem ent, the effect of a dealing uponthe work m ust always be considered in a fair dealing analysis , and a cou rt must be satisfied thatany effect on the w ork is not suc h that either the second or third condition of the three step test isbreached.

National Corn Growers Association v Canada (Import Tribunal), [1990] 2S.C.R. 1324, p 29; CRIA Autho rities, Tab 8Harv ard College v Canada (Com m iss ion o f P a t e n t s ), 2002 SCC 76 [2002 4S.C.R. 45, per Binnie J . (dissenting), para 205; CRIA Autho rities, Tab 6

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(ii i) A Fram ew ork for the Construction of Exceptions58. Considered together, the object of the A c t andthe three step test embod ied inArticle 13 of the TR IPS Agreemen t establish a framewo rk for the construction of exceptions tocopy r i ght infringement including, the fair dealing exception. That fram ewor k is as follows:

(a) exceptions form a bal ance to protect against excessive control of copyrightholders that would limit the ability to incorporate andmbellish creativeinnovati on on the public domain;exceptions should be clearly defined and narrow in scope and reach;

(c ) exceptions should not perm it uses which enter into econ om ic comp etition with theways that copy r ight holders norm ally extract econom ic value and thereby deprivecopy r ight holders of significant or t angible com mer cial gains; and

(d) excep tions sho uld not cause or have the potential to cause an unreaso nable loss tothe copyright holder.

C .he Serv ices do not Co nduct Research59RIA agrees with the fmding of the Board that Services that provide Previews donot conduc t research. In m aking this fmding, the Board dis t inguished the pure ly com m erci al

io n .The Ser v ices m erely appropr ia te substant ia l pa r ts of sound recor dings of musical works tom arket the sale of downloads. The Bo ard's finding in this regard is consistent with a decision ofthe High Cour t Auckland wherein the cou r t stated:

I too think that fair dealing for the purposes of resear ch or pr ivatestudy does not encompass an activity in which the materialconcerned is simply appropriated an dpassed on to others forcommerc i al profit of the appropriator. It seems to me that thesect ion draw s a l ine between the paid conduct of researc h and anemployee of a commercial organisation in the course ofem ploymen t and a paid approp r iati on of m aterial wh ich is thensold to someone else for the purposes of resear ch or private study.T elev i sion New Zea land L td v New smonitor Serv ices Ltd . [1994], 2 NZLR91, para 106; C R I A Authorities, Tab 14

( b )

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60. The Federal Court of Australia has also addressed the distinction between a purelycom m ercial dealing and research act ivity contem plated by fair dealing under the Austral ianCopyright Act, 1968. The Federal Cou rt stated:

In m y opinion, Jeffress ' dealing with the work is not som ethingdone for the purpose of r esearch . Al though the re t r ieval of thematerial may b e a com plicated exercise, it does not follow that thepurpose of Jeffress is research. Its purpose, which is purelycom mer cial, is to supply a photocopy of m aterial already publishedin return fo r a fee. This is an activity engaged in by J effress in theordinary course o f trade, which, in my view, is in the nature of aninformation audit andhould be distinguished from researchactivity of the kind contem plated by s. 40.De G aris v. Neville Jeffress Fidler P r y . L td (1990), 37 F.C.R. 99 (F.C. Aust.)("De Garis"), p 105; CR IA Author i t ies , Tab 3

D.hose Purpose May be Re l ied Upon61. The Federal Court of Appeal con cluded that, despite the comm ercial nature of theServices' activities, the purpose of the Previews had to be con sidered from the point of view ofthe consum er. This conc lusion endo rsed the B oard's finding that the Services w ere enti tled torely on the purpos e of consumer s because the Services facilitated consum ers' research.FCA Decision para 22; Appellant's Record, p 84Board Decision, para 108; Appellant's Record, p 41-42

62. In considering the purpose of consum ers as the purpose of the Services that makePrev iews available on their websites, the Boar d m isapplied the decision of this Court in C C H .63. In CCH, on the facts of the c ase, the Federal Cou rt of Appeal distinguished U.K.,Austral ian andNew Zealand jurisprudence h olding that the purpose to be considered for fai rdealing is the purpose of the person dealing with the work. The Court distinguished thatjurisprudence on gr ounds of the very sp ecial relat ionship between the Law Society of Upp erCan ada. ( the "Law Society") andpatrons of the Gr eat Library. That very special relat ionshipexisted because the Law S ociety had no pu rpos e for cop ying the legal publications at issue otherthan to facilitate the purpose of the per sons requesting the copies . The Law Society 's only aimwas to assist users of the Great Library in con ducting research or pr ivate study.

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CCH C anadian Ltd v L aw Society of Upper Canada, 2002 FCA 187 ("CCH2002"), paras 130 to 132; Appel lant's Authorit ies Volume 1, T ab 464. In CCH, in applying the law of fa i r dealing to the facts in the c ase, this Cou r t

Although the ret r ieval andphotocopying of legal works are notresearch in and of themselves , they a re necessa ry condi t ions ofresearch and thus pa r t of the research process. The repro duction oflegal works is for the purpose o f research in that it is an essentialelement of the legal research proc ess. There is no other purpose forthe copying; the Law Society does not profit from this service. Putsimp ly, i ts custom pho tocop y service helps to ensure that legalprofessionals in Ontario can access the materials necessary toconduct the research r equired to carr y on the practice of law.CCH 2004, para 64; Appellant's Authorities Volume 1, Tab 5

65. Ano ther imp ortant distinction between the facts in CCH andthe facts in this caseis that the G reat Library is a "library, archive or m useum" as that term is defined in the Act. B yreason o f section 30.2(1) of the A c t, the Law Society is entitled to rely on the purpose o f patronsof the Great Librar y in making copies. It should also therefor e be entitled to rely on the purpo seof patrons o f the Great Library under the fair dealing exception.

CCH 2002, paras 135 to 141; Appel lant's Authorit ies Volume 1, Tab 466. In this case, Se rv ices appropriate musical works in SOCA N's repertoire. They doso for a com merc ial purpose. Furtherm ore, although the com munication of Previews is init iatedby consum ers, the Services decided to m ake the Previews available to con sumers o n their owninit iat ive. Even if i t is acc epted that Services ar e enti t led to r ely on the "r esearch" p urpose ofconsum ers, the Services only purpo se in dealing with Previews is not to facilitate that research.The Services also use Previews for their own economic benefit in marketing the sale ofdownloads of sound rec ordings and that is their predom inate purpo se for using Previews.67. The Services are not therefore in a relationship with consum ers com parable to thevery special relationship between the Law Society 's G reat Library andlibrary patron s. Servicesprofit in providing Previews through en hanced sales of down loads. The purpose of Services inproviding Previews is not confined to facilitating "research" by consumers. In providingPreviews, Services have objectives other than to assist consum ers in conducting "research".OTTAWA: 1600938.6


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71. In each o f the U.K., Australia and New Zea land decisions, a publisher or com pilerof a publication claimed fair dealing based on the pers on wh o acquired a co py of the publicationat i ssue. The re la tionship between the publ isher /compiler and the per son who acqui red thepubl ica t ion w as a com merci al relationship. This relationship is com parable to the com mer ci al

ndconsumers w ho are prospective purchasers of downloads.The distinction between the foreign jur isprudence drawn by the Federal C ou r t of Appeal in theC C H case, based on the very sp ecial relat ionship between the Law Society andpatrons o f itsGre at Library, does not apply to the circumstanc es in this case.72. If the framework for the construction of exceptions developed above wereapplied, the purpose of c onsum ers wh o use Previews in co nducting a fair dealing analysis wouldalso be rejected. The fram ewo rk provides two reasons for reject ing the consum ers ' purpose.First, there is no need to pro tect against excessive control of copy r ight owners. The Services areappropriating the musical works for a com m ercial advantage in selling down loads. Permittingthe Services to rely on the purpose of their custom ers would tip the b alan cein favour of users togain a free r ide on the works of the copyright owners, andthere is no public policy reaso n thatServices could advance tha t would suppo rt the ir re l iance on the " research" purpo se of the i rcustom ers. Secon d, the three step test requires that exceptions be clearly defined. Perm itting theServices to rely upon the purpose o f consum ers in con ducting their shopping act ivit ies wouldopen the fair dealing exception to an ill-defined activity. There are a m yriad of ways in w hich aconsum er can deal with a copyright work with a view to deciding whether or not to purchase thewor k. If the purpose to be relied upon is that of the con sum er, the fair dealing exception wo uldbreach the firs t condition of the three s tep test andput C anada in breach of its obligations underthe TRIPS Agreement.E.onsumers and Research73. In the event that this Cou r t determines that the purpose of consum ers who listen toPreviews is r e levant to a fair dealing analysis, this Court must cons ider whether consumerssearching for a s ound rec ording to dow nload const i tutes "research " in the context of the fairdealing exceptio n .

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74. CRIA c oncur s with SOCA N, for the reasons given by SOCA N that the definitiongiven to "research" by the Federal Cou r t of A ppeal in the con text of the fair dealing exception isin error . That definit ion creates an exception of enorm ous scope w hich is in con flict with theobject and purpose of the A c t .

SOCAN Factum, paras 67 to 82 and 91 to 10175. The definition advanced by SOC AN:

the system atic investigation into the study of m aterials andsourcesin order to establish facts and reach new conclusionsis consistent with Australian jurispruden ce. In Australia, "research" in the con text of fair dealingis defined as:

diligent andystematic enquiry o r investigation into a subject inorder to discover facts or principlesS O C AN Fac t um, p ar a 96De Garis, p 105; CR IA Authorit ies , Tab 3

76. Furtherm ore, if the framew ork for the construction of exceptions developed aboveis applied, perm itting fair dealing to extend to con sum ers engaged in shop ping activities wouldalso be rejected. As stated above, there are a myr iad of ways in which cons umer s can deal with acopyright work with a view to deciding whether or no t to purchase the work. A co nsumer couldcopy a large extract of li terary works to enable the consumer to read the extract for the purposeof deciding whether or n ot to purchase the work. A co nsum er could make a full scale photographof an artist ic w ork to hang in the consum er's home for the purpose o f deciding whether or not topurchase the work. These andcountless other exam ples show the ill-defined nature of con struing"research" to include shopp ing act ivi t ies. The three step test requires that "research" be m oreclearly defined. Furtherm ore, these shop ping activities could easily have a serious effect on thedealing of a wor k to amou nt to the breach o f the second andthird conditions of the three steptest. The exam ple given above of the photogr aph of the artistic work is one which co uld clearlyconflict with a norm al exploitation of the artistic wor k andunreason ably prejudice the legitimateinterests of the right holder.

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F .as the Dealing Fair?77. The Federal Court of Appeal applied a correctness standard to the Board'sapplication of the fair dealing exception an d heard the parties where the Bo ard had failed to doso. In its review, the Federal Cou rt of Appeal adopted as its own the findings of the Board on thes ix CCH factors. As subm itted above, this Court should review the decision of the Federal Cou rt

78. The Federal Court of App eal er red in applying three of the s ix factors set out inCCH, nam ely the first, third andsixth factors.79. The first factor, the purpose of the dealing, is, for the reason s expressed abov e, thecommerc ial purpose of Services to m arket their s ale of downloads. Both the need for b alance and the three step test require that the purpose to be con sidered be that of the Services. The FederalC ourt of Appeal's adoption of the Board's research purpose was in error. The Services'commerc ial purpose is a factor against a finding of fair dealing.80. The third factor is the amount of the dealing. CRIA agrees with SOCAN'ssubmissions on this factor. As the purpose to be considered in applying fair dealing is, assubmitted above, the purpose of Ser vices andnot that of consum ers, the aggregate of m usic useby Services m ust be considered under the third factor . The magnitude of that am ount clearlydemo nstrates that the third factor weighs heavily against a f inding of fair dealing. The FederalCo urt of App eal was in er ror in fa il ing to take into account the m agni tude of the aggregateamount of m usic used.

S O C AN Fac t um, p ar as 10 9 t o 12881. CRIA submits that the Federal Court of Appeal erred in failing to take intoacco unt the sixth factor: the effect of the dealing on the wor k. The Court agreed w ith the findingsof the Boar d on this facto r . The Bo ard m ere ly bundled the f i f th andsixth factor into one and conc luded that Prev iews increase the pro bability of the sale of downloads w hich in turn benefitscopyright owners. The Board, andtherefore the Federal Cou rt of App eal, failed to con sider theeffect of the dealing on Pr eviews. The effect of the dealing on Preview s is clearly to eliminate acommerc ial mar ket for Previews. This is contrary to the expectation that copyright owners w ould

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norm al ly ext rac t econo m ic value f rom Previews. This i s i llustra ted in the dec is ion in U n i t e dStates v. ASCAP, cited by SOCA N in i ts factum, w hich recognized that there is a market forPreviews.

United States v ASCAP, 599 F Supp 2d 415 (2009); Appellant's AuthoritiesVo lume III , Tab 16, p 10-11S O C AN Fac t um, p ar as 8 6 to 9 0

82. The failure of the Federal Co urt of Appeal to corr ectly take into account the effectof the dealing on the m arket for Previews is of particular impo rtance having regard to C anada'sobligations under the TR IPS Agreem ent and the three step test. The C C H factor that incorp oratesthe second andthird conditions o f the three step test is a co nsideration of the effect of the dealingon the w ork. Failure to properly con sider that factor in con struing the fair dealing exceptionresults in an interpretation which is in breach of Canada's obligations under the TRIPSAgreement.83. Since the effect of the Service's dealing with Previews is to eliminate acommerc ial market for Previews, the dealing is in conflict with a norm al exploitat ion ofPreviews . The sixth factor therefore does not suppo r t a fording of fair dealing. Moreo ver , themagnitude of the effect is to breach the second co ndit ion of the three step test. CRIA submitsthat, because of the magnitude of the effect under the sixth factor, in view of Canada'sobligations under the TRIPS A greem ent, the Federal Cou rt of Appe al should have rejected thefinding of fai r dealing. This Cou rt m ay, for this reason alone, allow this appeal. Furthermor e,taking into accoun t the first, third andsixth factors, which CR IA submits, in the circumstanc es ofthis case, are the most impo rtant fair dealing factors, the Services' dealing with Previews is notfair and thus the fair dealing exception do es not ap ply.

PART IV SUBMISSIONS REGARDING COSTS84. CRIA requests the cos ts of this appeal.

PART V ORDER REQUESTED85. CRIA seeks an order:

(a )etting aside the decision of the Federal Cou rt of Appeal; and OTTAWA:1600938.6


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ALL OF W HICH IS RESPECTFULLY SUBMITTED,

lLday of June, 2011

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O D ) Dec laring that the Internet comm unication of Previews of musical works does notconstitute fair dealing pursuant to section 29 of the A c t .

O SL ER , H O SKIN & HARCOURT LLPSuite 1900, 340 Albe r t StreetOttawa, ON K 1R 7Y6Glen A. BloomTel: (613) 787-1073Fax: (613) 235-2867E-Mail: gbloom@o sler .com Counsel for the Respondent,Canadian Recor ding Industry Association

OS LE R , HO S K IN & HARCOURT LLPSuite 1900, 340 Albe r t StreetO tt awa, ON K1R 7Y6Marcus KleeTel: (613) 787-1049Fax: (613) 235-2867E-Mail: [email protected] Counsel for the Respondent,Canadian Rec ording Industry Association

O T T A W A : 1 6 0 0 9 3 8 .6


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PA R T VI TA BL E O F A U TH O R ITIES TA BL E O F CO NTENTST abiting

Para/Page/Article/SectionCase Law

1. C a n ad a R e v e n u e A g e n c y v . T e lf e r, 2009 FCA 23.ara 1 92. Copyright Licensing Ltd v. University of A uckland, [2002] 3 NZLR paras 35 and 3676 (Auckland H.C.).3. De Garis v. Neville Jeffress Pidler Pty. L td (1990), 37 F.C.R. 99105(F.C. Aust.).

4. D u n s m u i r v . N e w B r u n s w i c k , 2008 SCC 9, [2008] 1 S.C.R. 190.aras 34, 55, 57and 645. Fraser-Woodward Ltd. v. British Broadcasting Corp., [2005] F.S.R. p 793-79436 (Ch. D iv.).6. Harvard College v. Canada (Commissioner of Patents), 2002 SCCara 2 0 576, [2002] 4 S.C.R. 45.7. Longman Group Ltd v. Carrington Technical Institute Board of588Governors, [1991] 2 NZLR 574 (Auckland H.C.).

8. National Corn Growers Assn. v. Canada (Import Tribunal), [1990] 2 p 29S.C.R. 1324.9. Parry Sound (District) Social Services Administration Board v.aras 59-61 and O . P . S . E . U . , L o c a l 32 4 , 2003 SCC 42.010. Prairie Acid Rain Coalition v. Canada (Minister of Fisheries andaras 1 3 - 1 4Oceans), 2006 FCA 31.11. R i z z o & R i z z o S h o e s L td . (R e ), [1998] 1 S.C.R. 27.ara 2 1OTTAWA: 1600938.6


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12.Sillitoe v. McGraw-Hill Book Company (U.K) Ltd, [1983] FSR 545(Ch. D iv.).13. SOCAN v. Canadian Association of Internet Providers (2002), 19

C.P.R. (4th) 289 (F.C.A.), aff'd (2004), 32 C.P.R. (4th) 1 (S.C.C.).14. T e l e v is i o n N e w Z e a l an d L t d . v . N e w s m o n i to r S e rv i c e s L t d , [1994] 2NZLR 91.15. University of London Press Ltd v. University Tutorial Press, Ltd,[1916] 2 Ch 601.16. Zenner v. Prince Edward Island College of Optometrists, 2005 SCC77, [2005] 3 S.C.R. 645.Le gislation and Treaties17. G u i d e t o th e B e r n e C o n v e n t io n .

18. N o r t h A m e ri c an Fre e T r ad e A g r e e m e n t .19. T ra d e - R e l at e d A s p e c t s o f I n t e l le c t u a l P ro p e r t y R i g h t s , I n c l u d i n gT r ad e i n C o u n t e rf e i t G o o d s .20. United States Copyright Act, 17 U.S.C.21. World International Property Organization Copyright Treaty.22. World International Property Organization Performances andP h o n o g r am s T re a t y .23. W o r ld T ra d e O rg a n i z a ti o n A g r e e m e n t Im p l e m e n t a ti o n A c t , S . C .1994, c. 47.24. Agreement Establishing the World Trade Organization, preamble and List of Annexes.25. U n i te d S t a t e s S e c t i o n 1 10 (5) o f t h e U S C o p y r ig h t A c t ( C o m p l a in t

by the European Community) (2000), WTO D oc. WT/D S 160/R(P anel Repo r t), online: WT O .

p 558

para 35

para 106

p 613

paras 29-45

paras 9.6 and 9 . 1 1Article 1706(3)Article 13

section 110(5)Article 10A rticle 16

preamble and sections 56-69

paras 6.97,6.108, 6.109,6.112, 6.164,6.165, 6.183,6.222, 6.223,6.224 and6.229

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paras 1.30,2.119, 2.125-2.127p8,9,25 and 28

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26. D aniel Gervais, T h e T R I P S A g r e e m e n t : D ra f t in g H i st o ry a n dA n a ly s i s , 3 r d ed., (Toronto: Sweet & Maxw ell, 2008).

27. M yra J. Tawfik, "Is the WTO /TRIPS Agreem ent User-Friendly?",Fin al Repo r t to the Inte rnational Trade Tr eaties Co mm ittee of theCanadian Library A ssociation (30 January 2005), online . CanadianLibrary Assoc iation .28. Sam Ricketson, "WIPO Study on Lim itations andExceptions ofCopyright and Related Rights in the D igit al Environment", Repo r t t othe Standing Com mittee on Copyright and Related Rights in theDigital Environ men t, W IPO Do c. SCCR /9/7 (5 April 2003), online:WIPO.

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CRIA Responding Factum-June 13