2013 Copyright Tariff Report Vol.1 – Canadian Private Copying Collective (CPCC) files Tariff Proposal with the Copyright Board of Canada
Monday, February 13, 2012 by Sundeep Chauhan
Every year by March 31 Canadian Collective Societies (“Collectives”) must file tariff proposals with the Copyright Board of Canada. These tariff proposals set out what the Collectives believe businesses should pay for the use of music, audio-visual works (e.g. movies) and literary works (e.g. books).
In this first issue of the 2013 Copyright Tariff Report we look at the proposal published in the Canada Gazette on February 11, 2012 by the Canadian Private Copying Collective (CPCC) for private copying.
What is a Collective Society?
A collective society is an organization that administers rights in copyrighted works as set out in the Copyright Act of Canada (the “Act”), such as CDs, movies or books. Collectives operate on behalf of the thousands of copyright owners who are its members. Collectives monitor and collect compensation for the use of creative works where it would otherwise be unmanageable or inefficient for individual copyright owners to do so on their own due to the large number of users involved. For example, it would be challenging and costly for an individual copyright owner to monitor and collect compensation from restaurants across Canada who may play her music as background music. Collectives also simplify the act of licensing by allowing businesses to make one payment rather than potentially hundreds to use copyrighted works in their day-to-day operations.
Are Collective Societies legal?
Yes, under Canadian law Collectives are legal in Canada. Many Collectives are given rights under the Act or granted rights by the Copyright Board of Canada.
What is a tariff?
A tariff is a legal document drafted by a Collective which sets out the terms and conditions for using copyrighted works in a business. Tariffs set out the royalty (i.e. dollar amounts) a user must pay, how these royalties are calculated (e.g. based on square footage or a percentage of revenues) and any reporting or administrative provisions a user must comply with (e.g. reporting songs used or number of copies made). Tariffs can be proposed by the Collectives and certified by the Copyright Board of Canada to be paid for multiple years.
Who do tariffs apply to?
Tariffs apply to businesses that play music or show videos as background in their establishments (e.g. a fair, a restaurant or a fitness facility). Businesses who sell music are also required to pay tariffs (e.g. background music suppliers, online music retailers). Educational institutions or businesses that photocopy articles or textbooks must pay tariffs as well. Television and radio stations are required to pay tariffs for using copyrighted works such as music, movies, or television programs.
What is the Copyright Board of Canada?
The Copyright Board of Canada (the “Copyright Board”) is an economic regulatory body located in Ottawa. The Copyright Board is empowered to establish and certify the tariffs to be paid for the use of copyrighted works in Canada, following a formal public legal proceeding. When the Copyright Board certifies a tariff this means that it has determined the tariff is enforceable under Canadian law.
Why do tariffs matter?
The enforcement of tariffs can result in businesses paying significant royalties that directly affect their bottom-line. Businesses may also be liable to make payments under more than one tariff. While large broadcasters are aware of their obligations to make royalty payments to the Collectives, many small Canadian businesses or industry associations may not be aware of the tariffs or the multitude of Collectives who administer these rights. While the tariff process may seem confusing or daunting, with expert advice the smallest player can advance its interests and meaningfully participate in Copyright Board proceedings, potentially influencing the outcome of decisions that directly impact profitability.
When do tariffs apply?
Tariffs apply for the entirety of the time frame proposed by the Collective and as approved by the Copyright Board. As a result, the tariff discussed in this document which was filed prior to the March 31, 2012 deadline will apply from January 2014 onwards. The tariff for 2014 was not required to be filed under March 31, 2013. While the formal certification process by the Copyright Board may take years (e.g. the tariff may not be certified until 2015), the Collective is within its rights to seek payment back to the beginning of the proposed period (i.e. January 1, 2013), with interest.
How to become a party to a Copyright Board proceeding?
The tariff’s publication in the Canada Gazette serves as official notice to Canadians of the tariff’s existence. A business wishing to object to a tariff proposal filed by a Collective must, on its own or through its representative, file a notice to the Copyright Board within 60 days of its publication in the Canada Gazette. The business then becomes an “Objector” and is entitled to make its views known as part of the royalty rate-setting proceeding at the Copyright Board.
What generally happens during a Copyright Board proceeding?
Once the list of objectors has been confirmed, the Copyright Board will set a schedule for the formal legal proceeding in consultation with the Objector(s) and the Collective that filed the tariff. This schedule includes the opportunity to ask questions of the other parties. Following a period of questions, each party will file their Statement of Case (the Collectives generally go first) and the Collective will also file a Reply Case in response to the case and arguments of the Objector(s). The proceedings occur in Ottawa and can last anywhere from a day to a few weeks depending on the complexity of the proposed tariff.
CPCC
The Canadian Private Copying Collective (CPCC) is the agency tasked with collecting and distributing private copying royalties. A "private copy" is a copy of a song that is made by an individual for their personal use. The tariff applies to blank media such as CD’s and DVD’s but not digital audio recorders (e.g. an iPod). CPCC represents songwriters, recording artists, music publishers and record companies.
On February 11, 2012, CPCC’s Private Copying Tariff 2014 was published in the Canada Gazette thus opening the period for objections. Interested parties have until April 11, 2012 to file an objection to the tariff proposal with the Copyright Board. Filing a timely objection will ensure that an objector is made a party to the proceeding. CPCC filed its 2014 proposal a year in advance of the March 31, 2013 deadline for filing.
Private Copying 2014
The tariff imposes levies on blank audio recording mediums such as blank CD’s and DVD’s. Like the 2012-2013 proposal, CPCC is again proposing levies on electronic memory cards. However, in the 2014 proposal, CPCC has refined the language specifically to reference “microSD memory cards”. The proposed rates for microSD memory cards are identical to the proposed “electronic memory” proposals from 2012-2013:
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•50¢ for each electronic memory card with 1 gigabyte of memory or less;
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•$1.00 for each electronic memory card with more than one gigabyte of memory but less than 8 gigabytes of memory; and
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•$3.00 for each electronic memory card with 8 gigabytes of memory or more.
In regards to CD-R, CD-RW, CD-R Audio or CD-RW Audio, the proposed levy rate for 2014 is identical to the certified 2011 levy (and proposed 2012-2013 rates) of 29¢ for each. Once again, no levy is payable for:
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•a sale (or other disposition) that is to be (and is) exported from Canada; or
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•a medium sold (or disposed of) to a society, association or corporation that represents persons with a perceptual disability.
Reporting Requirements
Every manufacturer or importer is required to provide a variety of information to CPCC depending on its particular corporate structure. Examples of the type of information which must be provided to CPCC are:
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•name of the corporation
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•jurisdiction of incorporation
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•name of the proprietor of an individual proprietorship
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•names of the principal officers of all manufacturers or importers
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•any trade name under which it carries on business
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•the address of its principal place of business
Manufacturers or importers of bank media are also required to provide CPCC with:
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•the number of units of each type of blank audio recording medium on account of which the payment is being made
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•the number of each type of blank audio recording medium exported or sold or otherwise disposed of to a society, association or corporation that represents persons with a perceptual disability
Distribution of Royalties
The proposed distribution scheme for royalties collected remains the same:
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•58.2 percent, to be shared between the Society of Composers, Authors and Music Publishers of Canada (SOCAN), the Canadian Musical reproduction Rights Agency Ltd. (CMRRA) and the Society for Reproduction Rights of Authors, Composers and Publishers in Canada (SODRAC) for eligible authors;
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•23.8 percent to Re:Sound for eligible performers; and
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•18.0 percent to Re:Sound for eligible makers (record labels).
More information
Please note that there may be additional terms and conditions in the tariff proposals which affect your business.
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