Internet Previews of Music can be Fair Dealing under Copyright

The Federal Court of Appeal recently released an important ruling on the scope of the fair-dealing exception, in a judicial review of the Copyright Board’s decision on SOCAN Tariff 22.A. At issue was whether online music services have the benefit of the fair-dealing exception in Section 29 of the Copyright Act when they offer customers previews of music files of up to 30 seconds to help them select music to purchase. The court, following the decision of the board, ruled that they do. As a result, no royalties are payable to SOCAN for these previews.

Under Section 29, fair dealing for the purpose of research or private study does not infringe copyright. The main issues in the judicial review were whether the dealing for preview purposes was "research" and whether the dealing was fair.

On the application for judicial review, SOCAN argued before the court that the term "research" applied to activities involving investigation, systematic research, critical analysis, scientific inquiry, and factual discoveries arising and being carried out in a formal setting. It submitted that previews over the Internet have none of the characteristics required to fall within the concept of research.

The court rejected SOCAN’s submission, noting that "the word ‘research’ in Section 29 was not limited to scientific, economic, or cultural endeavours." Further, research could include an activity in which a "consumer is searching for an object of copyright that he or she desires and is attempting to locate, and wishes to ensure its authenticity and quality before obtaining it." The court agreed with the board that "Listening to previews assists in this investigation," and that the streaming of the previews was research for a fair-dealing purpose.

The court found that the board had not erred in its approach to determining whether the dealings were fair. The board had analyzed the six factors adopted by the Supreme Court in CCH v. Law Society of Upper Canada: the purpose, the character and the amount of the dealing; alternatives to the dealing; the nature of the work; and the effect of the dealing on the work. In assessing the amount-of-the-dealing factor, the board considered the length of each preview in proportion to the length of the complete work.

On the judicial review application, SOCAN argued that the amount of the dealing and the fairness of the dealings should have been determined based on the aggregate number of users and previews, as well as the resulting hours of uncompensated music. The court decided that SOCAN’s "yardstick" raised its own questions, including whether the yardstick was meant to replace the board’s measure or simply inform the analysis of the third factor, and what weight it should be given. The court concluded that "without an enlightened debate on these questions, and given the fragmentary nature of the available information, it would be wiser to leave this issue for another day."

McCarthy Tétrault Notes

In two US decisions, the courts rejected the fair-use defence for online previews. In United States v. American Society of Composers, Authors and Publishers (In re AT&T Wireless), the District Court for the South District of New York held that it was not fair use to offer previews of ringtones to potential purchasers. In Video Pipeline v. Buena Vista Home Entertainment Inc., the Court of Appeals for the Third Circuit held that Video Pipeline was not likely to succeed in raising a fair-use defence when it provided two-minute excerpts from feature films for use as previews on Internet retail websites. Neither of these cases was referred to by the Canadian court in the Tariff 22.A judicial review.