Transmissions of music on the Internet: an analysis of the copyright laws of Canada, France, Germany, Japan, the United Kingdom, and the United States.

• Author: Gervais, Daniel J.

ABSTRACT

This Article examines the status of copyright laws in several countries as they pertain to transmissions of music on the Internet. Because the exact legal ramifications of music transmissions over the Internet are currently unclear, the Author compares copyright laws of six major markets and examines the potential application of the copyright laws and other rights that may apply. The Article also discusses rules concerning which transborder transmissions are likely to be covered by a country's national laws, as well as specific rules applying to the liability of intermediaries. Next, the Article summarizes the comparative findings and discusses the relevant nuances that exist among the countries covered. Finally, the Article applies its findings to several real-life examples and details the practical impact of current and future copyright laws on the varying fact patterns.

1. INTRODUCTION

   With or without Napster, access to music on the Internet is unavoidable and is likely to become one of the main modes of commercialization of music. (1) In fact, copyright is at a crossroads; it must adapt to the increasing demand for legitimate online access to protected works, especially music, but also materials used for research and distance education, in particular scientific texts. Otherwise, peer-to-peer technology and other forms of online transmission and exchange may sound the death knell of copyright as we know it. (2) The answer will depend in large part on how fast the so-called "content industries" are able to provide business models in tune with the demands of the various user communities. (3) Chances are, copyright will survive. The way in which it is used and administered, however, will need to change. The traditional exclusive rights that prohibit use of protected material seem almost impossible to apply in the Internet age. The exclusive right paradigm is gradually being replaced by a compensation paradigm and the focus is shifting from preventing unauthorized uses to getting paid for "authorized"--and unavoidable--uses. (4) The copyright "concept" is still the best basis to claim financial compensation and organize markets along these lines, two essential tools for most creators, publishers, and producers.

   It is highly probable that in a few years radio and television receivers will be permanently connected to the Internet and listeners will be able to pick individual songs from an almost endless catalogue, preselect songs, and program music for special occasions. (5) The extent to which listeners will make temporary or permanent copies of the music on a computer or computer-like device is unclear. Will it make sense to have a permanent, stored copy of music? On a portable player, the answer is probably yes. (6) Will computers with several gigabytes of memory be used to transfer existing collections of compact discs onto a single server? For the operators of broadcasting stations, this type of storage clearly makes sense. (7) Its use and value inside the home is less clear. In other words, the exact business models are still emerging and being formed by old and new players. What is clear, however, is that, sooner or later, the exact legal ramifications of music transmissions on the Internet will need to be clarified.

   While some answers are emerging at the national level, it is necessary to understand the legal process in other countries and certainly of all major markets for at least two reasons. First, music transmissions across borders--and several transactions related thereto--may involve more than one set of national laws. (8) Second, if and when international rules are negotiated to deal with this new phenomenon, a better understanding of the differences between national laws will undoubtedly help to bridge existing differences.

   This Article will look at the copyright laws of six major markets, and the applicable "directives" of the European Union. For each country, the Article will examine the potential application of the primary copyright rights, in particular the right of reproduction and the right of communication to the public or public performance, but also other rights that may apply to musical works. The Article will also discuss rules concerning which transborder transmissions are likely to be governed by a country's national laws and any specific rules applying to the liability of intermediaries. Finally, the Article will summarize the comparative findings and apply them to a series of real-life examples. The Article does not deal with the so-called neighboring rights or distinct rights in sound recordings as such.

2. ANALYSIS OF THE NATIONAL LEGAL FRAMEWORKS

   1. Canada

      Analysis of the legal situation in Canada focuses on a recent decision by the Canadian Copyright Board (9) that answers several questions concerning Internet transmissions of music. In the absence of decisions by Canadian courts and in light of the fact that by and large the Board's decision seems consonant with Canadian copyright law principles, it constitutes a good indication of the current state of Canadian law on this subject. In this decision, the Board was called on to decide whether a music transmission on the Internet is a telecommunication subject to the tariffs and jurisdiction of Society of Composers, Authors and Publishers of Music of Canada (SOCAN), (10) the single collective that manages performing rights in Canada. In other words, the Board had to decide whether SOCAN could collect a royalty for performances of music by telecommunication on the Internet. In addition, if the so-called "Tariff 22" applied, the Board had to determine who would be responsible for the payment of royalties. The Board's decision is only a "Phase I decision" on legal issues. (11) The Board has not issued the tariff itself, which will be Phase II of the process, and is unlikely to move forward until the appeal of the Board's decision before the Federal Court of Canada--by both parties--is settled or a final decision rendered.

      1. The Right of Reproduction

         In paragraph 1(a) of section 3 of the Canadian Copyright Act, (12) the copyright owner is granted a right of reproduction in any material form, which includes reproductions in digital form. A reproduction occurs, for example, when a phonogram is converted in a specific digital format to be transmittable via Internet. (13) A second reproduction takes place when the work is copied onto a server. (14) The user who requests the musical work from a website makes a third copy. (15) The first two clearly need to be authorized. Does the third copy--made by the user--also need to be licensed? There is no clear answer to this question, and the Copyright Board did not answer it as such. In a separate decision, however, the Board approved a levy on blank media that covers digital media and does seem precisely to compensate for end-user copying. (16) Interestingly, technology is being developed--such as SDMI--to prevent such copying. (17) Clearly, however, the question whether a user can make or send additional copies is different from the questions surrounding the original transmission.

         The copy legally downloaded by a user would probably be considered licensed, at least implicitly or on the basis of a mouse-click contract. (18) Because there is no "fair use" under Canadian law, further use made by the user of the downloaded copy would either need to be licensed or be considered "fair dealing" under section 21 or 30 of the Copyright Act. (19) The concept of "fair dealing" in Canadian law comprises a series of specific exceptions to the exclusive right of the author, including research, private study, criticism or review--provided the source author and other rightsholders are acknowledged--news reporting, as well as various exceptions concerning educational institutions, libraries, archives, and museums. (20)

         There is, however, a specific exception for private use of recorded music. Section 80(1) allows the reproduction for private use of a musical work embodied in a sound recording and performers' performance. This exception does not apply if the reproduction is for the purpose of selling, renting, offering for sale or rental, distributing--whether or not for the purpose of trade--communicating to the public by telecommunication, or publicly performing the musical work. (21) It is this kind of private copying that is intended to be compensated by the levy recently decided by the Copyright Board, pursuant to section 82 of the Copyright Act.

      2. The Right of Communication

         In its decision, the Copyright Board first had to determine whether a transmission through the Internet is a communication. It concluded that transmitting musical works to someone via the Internet was in fact a communication of the information. (22) According to the Board, the fact that the work is not transmitted in a sole component but in many elements or packets does not influence the concepts of communication and reproduction under copyright. This is only a consequence of the technology used. Even if the work is not contained in a single file, the Board concluded that a reproduction of the work occurs because the work can be reconstituted: "While some intermediaries may not be transmitting the entire work or a substantial part of a work, all of the packets required to communicate the work are transmitted from the server on which the work is located to the end user. Consequently, the work is communicated." (23)

         To be covered under the Canadian Copyright Act, the communication has to be done by telecommunication. (24) Section 2 of the Act describes telecommunication as any "transmission of signs, signals, writing, images or sounds or intelligence of any nature by wire, radio, visual, optical or other electromagnetic system." (25) The conclusion at which the Board arrives is that packets of information transmitted on the Internet meet that definition. Consequently, a musical work transmitted via Internet is a...