Landmark Decision: Supreme Court of Canada Rejects Additional Royalty for Game Downloads

by Timothy W. Murphy

In a piece of good news for Canadian video game publishers and users, the Entertainment Software Association (ESA), an organization which represents the Canadian computer and video game industry, has won a landmark copyright case at the Supreme Court of Canada.

The Court, in a 5-4 decision, rejected the collection of performance royalty fees, in addition to reproduction royalty fees, for music contained in video games downloads.

The ESA was appealing the applicability of Tariff No. 22.A, a 2007 decision by the Copyright Board of Canada, subsequently upheld by the Federal Court of Canada, which, amongst other things, imposed a tariff for music contained in downloads.  The additional tariff had been sought by SOCAN, an organization that represents music creators and publishers, to compensate its members for the use and sale of their works over the internet.

In overturning the applicability of the tariff to video games, the Supreme Court held that the act of “downloading” a video game does not constitute “communication to the public” for the purposes of the Copyright Act.  In other words, the act of downloading a game is like the traditional method of selling a game in a store and, as a result, no music performance royalties are payable to SOCAN.  In coming to its decision, the court relied on the principle of “technological neutrality."

The principle of technological neutrality is reflected in s. 3(1) of the Act, which describes a right to produce or reproduce a work “in any material form whatever”.  In our view, there is no practical difference between buying a durable copy of the work in a store, receiving a copy in the mail, or downloading an identical copy using the Internet.  The Internet is simply a technological taxi that delivers a durable copy of the same work to the end user…

The lasting effect of the decision remains to be seen, but for the moment it is clear that video game publishers will no longer have the added cost of collecting and paying additional performance royalties to SOCAN for music contained in their game downloads.

Photo: Chris Mikula, The Ottawa Citizen

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Timothy W. Murphy

Timothy W. Murphy

Tim is a lawyer and the managing director of Murphy & Company, a Vancouver based business and intellectual property law firm. He has a masters’ degree in law from McGill University. When not working, Tim enjoys spending time with his young family and playing music. more

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