Renvoi: Lex Situs Conflictus

Canadian Conflict of Laws Blawg by Seva Batkin

RaSC Litmus Test: Copyright Tariffs and International Communications

Posted by Seva on October 31, 2008

Real and substantial connection is an inherently imprecise concept; its existence determined based on the full factual matrix of a particular matter. While fine for regular litigation, where the judge has the inherent jurisdiction to make this determination, it appears somewhat deficient in administrative contexts, where the jurisdiction should be determined via a standard test capable of being applied by non-judicial personnel. It appears that the Copyright Board of Canada was up to this challenge, elucidating just such a test in its recent decision on webcasting tariffs (see also discussion of this decision on Michael Geist’s blog).

This particular story started in SOCAN v. CAIP, where Binnie J. applied the real and substantial connection standard to the concept of telecommunication under the Copyright Act, holding that:

The applicability of our Copyright Act to communications that have international participants will depend on whether there is a sufficient connection between this country and the communication in question for Canada to apply its law consistent with the “principles of order and fairness . . . that ensure security of [cross-border] transactions with justice”…

He concluded that “a telecommunication from a foreign state to Canada, or a telecommunication from Canada to a foreign state, “is both here and there””, and the relevant connecting factors to consider in determining whether RaSC exists between the communication and Canada include “the situs of the content provider, the host server, the intermediaries and the end user.” He also elucidated a couple of presumed cases of “sufficient connection”, where Canada is the country of transmission or reception. Almost parenthetically, he noted that the even in such cases, “[w]hether or not a real and substantial connection exists will turn on the facts of a particular transmission”.

From a purely legal perspective, it seemed that Binnie J. had settled the question of jurisdiction, at least with respect to individual cases of cross-border transmissions. Faced with a question of whether a particular impugned transmission was subject to Canadian copyright law, the court is to consider all of the circumstances, apply the RaSC test, and make its determination.

However, it is one thing to judicially analyze individual transmissions in detail, but quite another to create a litmus test which can be more or less automatically applied to determine whether any particular transmission falls within the reach of the Copyright Act. This was exactly the issue that the Copyright Board of Canada faced in considering the royalty rates for Internet-based transmission of music, including by “services whose severs are located outside Canada”:

The problem with this proposition [that a telecommunication from Canada to a foreign state, ‘is both here and there’] is that it requires looking at each communication individually to determine if the connection to Canada is sufficiently strong for the communication to happen “here”. In practice, this is impossible to do. As a result, we will have to resort to rough approximations to determine what is included in the tariff and what is not.

Despite the promise to “resort to rough approximations”, this issue was not further raised by the Board in the first part of its decision (released on October 17, 2007) dealing with tariffs applicable to downloadable and streaming music.

It was not until the second part of its decision, released on October 24, 2008, dealing with webcasting by radio and TV stations, audio streaming websites, game sites, and all other sites that in some way use music, that the Board explained what rough approximations it intended to make. Specifically, it made the following assumptions:

  • Practically all of the traffic on the site of a Canadian radio or television station involves a communication in Canada.
  • For Canadian sites whose focus may be largely or even exclusively non-Canadian Internet users, all communications ending in Canada are communications in Canada, while only a small proportion of communications that end outside of Canada (5%) nevertheless are communications in Canada.
  • For Non-Canadian sites, no non-Canadian visits have a sufficiently substantial connection with Canada to constitute a communication in Canada.

As can be seen, the test is in fact quick and simple, without resorting to factual or contextual analysis beyond the location of the source and the destination of the transmission. Whether it will stand, only time will tell. After all, the Board’s position in its first decision, concluding that the location of the server was the sole factor determining whether a transmission was subject to royalties, was expressly rejected by both the Federal Court of Appeal, and the Supreme Court of Canada.

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