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The Copyright Board has just decided it can proceed to consider a proposed tariff on digital audio recorders such a Apple's iPod. Deja vu? Indeed. The last time the Board dealt with this issue, it had approved a tariff on the memory embedded in these types of devices. The Federal Court of Appeal granted an application for judicial review of this decision, finding that the Board lacked the statutory authority to do what it did. The Court said, "A digital audio recorder is not a medium;" it can't be subject to a levy.
This time, the Board dove into a clever array of analytical acrobatics to point out that the issue is different. Last time, according to the Board, it was all about the memory in the recorder. Now, it is about the recorder itself. In 2004, the Court had said, "it is the device that
is the defining element of the levy and not the memory
incorporated therein," but the Board didn't seem to accept that categorization of its previous decision. And what about the Court's apparently unambiguous remark that "A digital audio recorder is not a medium"? Well, the Board found that this was said as obiter dicta. Likewise with the Court's statement that "there is no authority for
certifying a levy on such devices or the memory embedded
therein." Since, in the Board's view, the Court didn't have to make that finding, it isn't binding.
Though objectors suggested the Board should at least find the Court's comments persuasive, if not determinative, the Board disagreed. The Board's statement was the exact opposite of the Court's: "a digital audio recorder is an 'audio recording medium'" as long as it is ordinarily used to make private copies of music (my emphasis). While the Court cautioned that "it is for Parliament to decide
whether digital audio recorders such as MP3 players are to be
brought within the class of items that can be levied," the Board employed a purposive interpretation of the Act to conclude otherwise. Incidentally, the Board also rejected objectors' arguments about estoppel and other equitable principles.
So what are the implications of all this?
Well, for one thing it
throws a wrench in the federal government's plans for copyright reform.
If the government wants to go ahead and ratify the WIPO Internet
Treaties, it can't ignore the overlap between locks and levies, which I've written about in the Denver University Law Review. Before getting elected, the Conservatives said, "A Conservative Government will eliminate the levy on blank recording materials." The Board's decision will put the Conservative's promise to the test.
Even if the government doesn't act, a levy on devices opens up a whole new avenue to argue that the levy is unconstitutional,
as I've cautioned in the McGill Law Journal. It was one thing for the
Court to uphold a levy on blank CDs, but bringing multi-functional
devices into the mix would put the levy on slightly shakier ground.
In short, my argument is that the broader the legal and practical
effects of the levy, the less it is connected to copyrights and the
more it trenches on provincial jurisdiction over property and civil
rights. With convergence being the name of the game (for
example, take the iPhone, expected to be coming soon to Canada), the effects of this proposed levy could be very broad.
In fact, precisely what types of "digital audio recorders" will be
levied now is anyone's guess. The Board expressly stated that it
has no qualms about a possible levy on cellular phones and computers. Previously, cell phone companies had dropped their objection to a
proposed tariff when they were promised phones wouldn't be levied. I doubt such companies will be so passive this time around.
Michael Geist points out
that the door is open for discussions about a levy to legalize p2p (if it isn't already in Canada), but
that the current model won't work for that. He's right, and his
observations are pretty much in line with the recommendations I've made in the Canadian Journal of Law and Technology.
Note that the Board hasn't approved a tariff yet. It
has only decided that it can hold hearings on the proposed tariff to
consider whether and how it should be approved. Though the device/medium distinction (or lack thereof) seems settled in the Board's mind, it remains to be tested with evidence whether digital audio recorders are ordinarily used by individual consumers to copy music. However, given that the Board has defined "ordinarily" as meaning, in essence, not extraordinarily, it is nearly certain that a levy on at least some types of devices would be approved.
Bear in mind, however, that things may not
get that far. There's nothing stopping opponents from seeking
immediate judicial review of this decision from the Board. If that
happens, expect the matter to be tied up in the courts for the
foreseeable future. One of the last times an interim decision of the Board on
legal issues was reviewed -- in Tariff 22 -- it took nearly 9 years for
the matter to wind its way back to the Board. Who knows what private copying technologies will look like by then?
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