Friday, 20 July 2012

Recent Supreme Court of Canada Copyright Decisions Pave the Way for Research and Innovation by Expanding the Ambit of Fair Use

Copyright law is designed to strike a careful balance between the property rights of authors in their original works and the public interest rights to foster economic and social progress [1]. Historically, copyright jurisprudence tended to favor the economic interest of authors by narrowly defining the scope of available defences to copyright infringement claims.  Recently however the defence of fair use has been the subject of heightened judicial analysis [2] in CCH Canadian Ltd. v. Law Society of Upper Canada, where the Supreme Court of Canada laid out a two pronged test for the determination of a valid fair dealing defence to copyright infringement pursuant to section 29 of the Copyright Act.  The first prong of the test is a determination of the purported infringing action – can it be construed as “research or private study”, or “criticism or review” ,or does it constitute “news reporting”? In the event that the impugned infringing activity meets the first prong of the test then the second enquiry looks at factors such as “the purpose, character, and amount of the dealing; the existence of any alternatives to the dealing; the nature of the work; and the effect of the dealing on the work” to determine if in fact the appropriation of the work may be construed as “fair dealing”.

The increased focus on re-balancing competing copyright interests is largely driven by the juxtaposition of globalization and the growth of the digital economy[3]   There are those who argue[4] that the current copyright regime is based on eighteenth century concepts of property rights that advocated “artificial scarcity…and by analog limitations on copying,”. The digital economy on the other hand makes copying infinitely easier resulting in the “democratization” of content.
So what constitutes fair use in the context of the fast paced and transformative digital economy?  The Supreme Court of Canada has ruled on a series of five copyright cases that legal analysts believe may re-balance copyright law by tilting it more toward the public interest. The five cases address a wide spectrum of vexing problems that span copying textbooks, music downloading and place limits on the application of tariffs which regulators such as the Copyright Board may levy. Michael Geist a leading legal expert commented that in these decisions [5] “the court has delivered an undisputed win for fair dealing that has positive implications for education and innovation, while striking a serious blow to copyright collectives such as Access Copyright” and that” the court has recognized that crucial to the economy…” These cases have held that cable companies and internet providers are not required to pay royalties for music downloads as it is tantamount to sampling merchandize before consumers decide on what to purchase, that school boards are not required to pay tariffs on selective copying of materials from textbooks  designed for study and research purposes.. Of particular significance of these decisions is the liberal interpretation of the meaning of “research” which “can include many activities that do not demand the establishment of new facts or conclusions. It can be piecemeal, informal, exploratory, or confirmatory. It can in fact be undertaken for no purpose except personal interest…”

These decisions affirm that there is greater good in expanding fair use to copying that may otherwise be protectable copyright in light of the rapid advancement of the digital economy. A broader interpretation of fair use can accelerate innovation and foster economic opportunity.  As the Oxford Economic Report on the New Digital Economy observed “ the new digital playing field has all but obliterated the old working models for the music, publishing and field industries…With information becoming a commodity…firms are switching from subscription fees to “freemium” pricing that combines free services with paid-for subscription services…” 

The Government of Canada  is placing increased emphasis on the strategic value of data characterizing it as  “Canada’s new natural resource”[6].  As an integral part of the Action Plan on Open Government[7] open data aims to provide “raw data available in machine readable format to citizens, governments, not for profit and private sector organizations to leverage it in innovative and value added ways.”  This contemplates the implementation of a licensing scheme that removes the current restrictive application of section 12 of the Copyright Act that protects Crown Copyright including compilations of data. A proposed “universal open government license” is designed to remove such restrictions and the recent Supreme Court of Canada decisions in expanding the fair sue doctrine may further accelerate the process. 

[1] Th├ęberge v. Galerie d’Art du Petit Champlain inc., 2002 SCC 34, The Copyright Act is usually presented as a balance between promoting the public interest in the encouragement and dissemination of works of the arts
and intellect and obtaining a just reward for the creator (or, more accurately, to prevent someone other than the creator from appropriating whatever benefits may be generated
[2] CCH Canadian Ltd. v. Law Society of Upper Canada, [2004]
[3] The New Digital Economy How it will transform business, Oxford Economics, 2011 the total size of digital economy is estimated at $20.4 trillion, equivalent to roughly 13.8% of all sales flowing through the world economy.
[4] How to Fix Copyright, Bill Patry Oxford University Press
[5] ESAC v. SOCAN, Rogers v. SOCAN, SOCAN v. Bell - song previews, Alberta v. Access Copyright, Re:Sound
[6] Tony Clement, July 12, 2012, Winnipeg Free Press


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