The Federal Court of Appeal held that The Canadian Radio-Television and Telecommunications Commission (the “Commission”) has the statutory power to establish a “value for signal” regime in Canada. Under this regime, local television stations will have the option to privately negotiate with cable television providers (referred to as “broadcast distribution undertakings” or “BDUs”) for the right to distribute the programming broadcast by those local television stations.
Sharlow J.A. first held that both the Broadcasting Act and the Copyright Act are part of “Canadian cultural policy.” Section 21(1) of the Copyright Act gives the local television stations a copyright in the signal it broadcasts. However, due to the operation of s.31(2) of the Copyright Act, retransmission does not infringe s.21(1) so long as the five conditions set out in ss.31(2)(a) - (e) are met. Importantly, s.31(2)(b) requires that the retransmission be lawful under the Broadcasting Act. Accordingly, Sharlow J.A. held that by making the BDUs’ s.31(2) retransmission rights subject to s.31(2)(b), “Parliament has ranked the objectives of Canada’s broadcasting policy ahead of those statutory retransmission rights.” As such, the Commission has the power to adopt a regulation or a licensing condition that would oblige a BDU to pay a local television station for retransmission rights. It is irrelevant that this is characterized as a royalty. Further, the rejection of past amendment proposals that would grant television stations a statutory right to a retransmission fee under the Copyright Act are also irrelevant. Finally, Sharlow J.A. was not persuaded that the proposed regime would undermine Canada’s position in relation to recent 2001 World Intellectual Property Committee on Copyright and Related Rights proceedings.
In Nadon J.A.’s dissenting opinion, the creation of a value for signal regime would be ultra vires the Commission because it would conflict with s.31(2)(d) of the Copyright Act, which clearly expresses Parliament’s intention that royalties be paid for the retransmission of distant, not local, signals. From the fact that s.31(2)(d) imposes the payment of a royalty on distant signals, but not local signals, Nadon J.A. inferred that Parliament intended local and distant signals to be treated differently. One aspect of this is that royalties can only be imposed on those retransmitting distant signals. This is a “clear limit” on the Commission’s power to impose conditions under the Broadcasting Act. Nadon J.A. disagreed with Sharlow J.A. insofar as s.31(2)(b) shows that Parliament has ranked Canada’s broadcasting policy ahead of its copyright policy. In his view, s.31(2)(b) and (d) apply with equal force. Sharlow J.A.’s interpretation is erroneous as in effect it holds that a royalty cannot be charged for the retransmission of local signals, unless the Commission decides otherwise. Nadon J.A. also disagreed with Sharlow J.A. insofar as she holds that s.31(2)(b) is an expression of broadcasting policy, whereas s. 31(2)(d) is an expression of copyright policy. In his view the value for signal regime is functionally analogous to the regulation of tariffs under s.31(2)(d) and accordingly is ultra vires. The Commission cannot create a tariff that, “Parliament has, in effect, forbidden.”
February 28, 2011
Link to Decision
Steve Holinski
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