S.C.C. File No. 34210 IN THE SUPREME COURT OF CANADA (On Appeal from the Federal Court ofAppeal) BETWEEN: RE:SOUND Appellant (Applicant) - and- MOTION PICTURE THEATRE ASSOCIATIONS OF CANADA, ROGERS COMMUNICATIONS INC., SHAW COMMUNICATIONS INC., BELL EXPRESSVU LLP, COGECO CABLE INC., EASTLINK, QUEBECOR MEDIA, TELUS COMMUNICATIONS COMPANY, TURNER BROADCASTING SYSTEMS, INC., CANADIAN BROADCASTING CORPORATION and CANADIAN ASSOCIATION OF BROADCASTERS Respondents (Respondents) FACTUM OF APPELLANT, RE:SOUND OSLER, HOSKIN & HARCOURT LLP OSLER, HOSKIN & HARCOURT LLP P.O. Box 50 340 Albert Street, Suite 1900 1 First Canadian Place Ottawa, Ontario KIR 7Y6 Toronto, Ontario M5X IB8 Mahmud Jamal Patricia J. Wilson Glen Bloom Marcus Klee Tel: (613) 787-1009 Jason MacLean Fax: (613) 235-2867 Tel: (416) 862-6764 Fax: (416) 862-6666 Counsel for Re:Sound Ottawa Agent for Re:Sound TO: THE REGISTRAR OF THE SUPREME COURT OF CANADA AND TO: HAYES ELAW LLP FASKEN MARTINEAU DUMOULIN LLP Yonge Eglinton Centre Suite 1300 2300 Yonge Street 55 Metcalfe Street Box 2397, Suite 2102 Ottawa, Ontario KIP 6L5 Toronto, Ontario M4P lE4 Mark Hayes Gerald Kerr-Wilson Tel: (416) 966-3529 Tel.: (613) 236-3882 Fax: (416) 966-3529 Fax: (613) 230-6423 Counsel for the Respondent, Ottawa Agent for the Respondent, Canadian Association of Canadian Association ofBroadcasters Broadcasters AND TO: MCMILLAN LLP MCMILLAN LLP Brookfield Place 50 O'Connor Street, Suite 300 181 Bay Street, Suite 4400 Ottawa, Ontario KIP 6L2 Toronto, Ontario M5J 2T3 David W. Kent Marie-France Major Tel: (416) 865-7143 Tel: (613) 232-7171 Fax: (416) 865-7048 Fax: (613) 231-3191 Counsel for the Respondent, Ottawa Agent for the Respondent, Motion Picture Theatre Associations Motion Picture Theatre Associations of ofCanada Canada AND TO: FASKEN MARTINEAU DUMOULIN LLP Suite 1300 55 Metcalfe Street Ottawa, Ontario KIP 6L5 Gerald Kerr-Wilson Tel.: (613) 236-3882 Fax: (613) 230-6423 Counsel for the Respondents, Rogers Communications Inc., Shaw Communications Inc., Bell ExpressVu LLP, Cogeco Cable Inc., Eastlink, Quebecor Media, and Telus Communications Company AND TO: FASKEN MARTINEAU FASKEN MARTINEAU DUMOULIN LLP DUMOULIN LLP Suite 1300 The Stock Exchange Tower 55 Metcalfe Street P.O. Box 22, Suite 3700 Ottawa, Ontario KIP 6L5 800 Victoria Square Montreal, Quebec H4Z 1E9 Marek Nitoslawski Gerald Kerr-Wilson Tel: (514) 397-4335 Tel.: (613) 236-3882 Fax: (514) 397-7600 Fax: (613) 230-6423 Counsel for the Respondent, Ottawa Agent for the Respondent, Canadian Broadcasting Corporation Canadian Broadcasting Corporation TABLE OF CONTENTS PART I- BRIEF STATEMENT OF FACTS 1 A. OVERVIEW 1 B. BACKGROUND FACTS 4 (a) Re:Sound 4 (b) Re:Sound's Proposed Tariffs 6 C. DECISIONS BELOW 7 (a) Copyright Board ofCanada 7 (b) Federal Court ofAppeal (Trudel JA, Noel and Mainville JJ.A. concurring) 8 PART II - QUESTIONS IN ISSUE 9 PART III - ARGUMENT 9 A. Recording Artists And Record Companies Are Entitled To Equitable Remuneration Under Section 19 OfThe Copyright Act When Their Music Is Played In Movies And On TV, Just As They Are Remunerated When Their Music Is Played On The Radio 9 1. The Standard ofAppellate Review is Correctness 9 2. The Context ofthis Appeal 9 3. The Modem Principle ofStatutory Interpretation 10 4. The Purpose of Section 19 ofthe Copyright Act 11 (a) Section 19 recognizes the nature and importance ofequitable remuneration for performers and makers ofsound recordings 11 (b) Section 19 implements a regime oflayered reproduction and performance rights .... 14 (c) Section 19 should be interpreted in a technologically neutral way that allows the Act to continue to apply to new media technology 16 (d) Section 19 achieves equality with the rights ofauthors and composers 18 (e) Section 19 complies with Canada's obligations under the Rome Convention 20 (f) Conclusion with respect to the purposive interpretation ofs. 19 21 -11- 5. The Purpose of Section 2 ofthe Copyright Act 21 (a) To create a new, consolidated copyright in movies 21 (b) Reconciling the English and French meaning of"soundtrack" 25 6. The Proper, Purposive and Harmonious Interpretation ofss. 19 and 2 ofthe Copyright Act 26 7. Anomalies and Absurdities Flowing From the Decisions Below 26 (a) Technologically regressive 27 (b) Fails to interpret the Copyright Act as a whole 27 (c) Prioritizes the English definition ofsoundtrack, and fails to reconcile the English and French meanings 28 (d) Throws Canada out ofstep with international peers 28 (e) Breaches the Rome Convention 29 (t) Compromises Canadian recording artists' and record companies' international reciprocal equitable remuneration rights 31 (g) Confuses and confIates distinct layered rights 32 (h) Entrenches unwarranted inequality between the rights ofperformers/makers and authors/composers 35 (i) Rental rights are not in issue 34 8. Conclusion 36 PART IV -SUBMISSIONS ON COSTS 38 PART V- ORDER SOUGHT 38 PART VI - LIST OF AUTHORITIES PART VII - RELEVANT STATUTORY PROVISIONS PART I- BRIEF STATEMENT OF FACTS A. OVERVIEW 1. This case is about basic fairness under the Copyright Act.! It is about providing fair compensation or "equitable remuneration" under s. 19 of the Copyright Act to recording artists and record companies across Canada and internationally when their music is played in movies and on TV, just as they are currently paid when their music is played on the radio. The financial stakes are significant: about $45 million annually - a 300% increase from current levels - in lost equitable remuneration royalties. The cultural stakes, however, are much greater: at issue is the ability of Canadian cultural industries to remain competitive internationally and for Canadian musical creativity to survive and flourish. 2. Section 19 ofthe Copyright Act provides that recording artists and record companies, as "performers" and "makers", respectively, are entitled to "equitable remuneration" for the public performance oftheir sound recordings. The Federal Court of Appeal and Copyright Board held that the definition of "sound recording" in s. 2 of the Copyright Act precludes equitable remuneration under s. 19 for pre-recorded music forming part of the soundtrack of a "cinematographic work", such as a movie or TV program soundtrack. This means that recording artists and record companies are paid under s. 19 when their music is played on the radio, but are not paid when their music is played in movies and on TV - even if they contribute significantly to the success ofthose audiovisual works, and even though authors and composers are paid when the same music is played in the same movies and TV programs. 3. To illustrate, under the approach ofthe decisions below, Ms Celine Dion is paid under s. 19 ofthe Copyright Act when "My Heart Will Go On" is played on the radio, but she is not paid Copyright Act, R.S.C. 1985, c. C-42. -2- under s. 19 when the same song is played in the movie Titanic, even though her performance was a critical factor in the movie's success. By contrast, the song's author, Mr. James Homer, is paid both when the song is played on the radio and in the movie. The Federal Court of Appeal and the Copyright Board found that Parliament intended to shut out performers like Ms Dion from sharing in a movie's success. 4. Parliament intended no such thing. The purpose ofs. 19 is just the opposite: the provision provides fair compensation to recording artists and record companies when their music is publicly performed or broadcast, whether in movies, on TV, on the radio, or in any other medium. Section 19 provides as follows: Right to remuneration Droit aremuneration 19. (I) Where a sound recording has been 19.(1) Sous reserve de l'article 20, I'artiste­ published, the performer and maker are entitled, interprete et Ie producteur ont chacun droit it une subject to section 20, to be paid equitable remuneration equitable pour I'execution en public remuneration for its performance in public or its ou la communication au public par communication to the public by tele­ telecommunication - a ['exclusion de toute communication, exceptfor any retransmission. retransmission - de l'enregistrement sonore publie. [Emphasis added] [Emphasis added] 5. The only exclusion to the broad right of equitable remuneration under s. 19 is for retransmissions: no particular entity or medium - such as movies, TV, or radio - is excluded. 6. Parliament did not intend this broad right to equitable remuneration to be cut-down by the definition of"sound recording" in s. 2 ofthe Copyright Act, which provides as follows: "sound recording" « enregistrement sonore » « enregistrement sonore » "sound recording" "sound recording" means a recording, fixed in any « enregistrement sonore » Enregistrement constitue material form, consisting of sounds, whether or not de sons provenant ou non de I'execution d'une of a performance of a work, but excludes any oeuvre et fixes sur un support materiel quelconque; soundtrack of a cinematographic work where it est exclue de 1a presente definition la bande sonore accompanies the cinematographic work[.] d'une oeuvre cinematographique lorsqu'elle accompagne celle-ci. - 3 - 7. The purpose of the definition of "sound recording" is not to preclude equitable remuneration for sound recordings broadcast in movies, TV programs, and other audiovisual works. Rather, its purpose is to create a new copyright in movies and other "cinematographic works," one that consolidates their audio and visual elements to ensure that movies do not attract copyright protection as hoth a movie and a sound recording. There is absolutely no evidence that Parliament intended s. 2 to take away the broad right to equitable remuneration granted by s. 19. 8. The High Court of Australia has interpreted definitions of a "sound recording" in the U.K. Copyright Act 1956 and the Australian Copyright Act 1968 that are materially identical to the definition in s. 2 ofthe Act. The High Court held that the purpose ofthese provisions was to prevent the maker of a movie from acquiring a separate copyright, as a sound recording, in the soundtrack of the movie (i.