Supreme Court nixes value for signal regime

The Supreme Court released its decision yesterday ruling that the CRTC did not have the power to implement its proposed “value for signal regime”. The decision is a very significant one. First, because it limits the powers of the CRTC under the Broadcasting Act. Second, because it interprets S. 89 of the Copyright Act in a way that, effectively, creates a pre-emption doctrine that limits the powers to create copyright like rights to Parliament.[i]

The value for signal regime would have permitted local television station broadcasters to negotiate compensation for the retransmission of their signals by cable and satellite companies (BDUs). In substance, the regime would have granted individual broadcasters an exclusive right to require deletion of the programming to which they hold exclusive rights from all signals transmitted by BDUs, which right they could have used to leverage compensation from the BDUs.

In the Reference re Broadcasting Regulatory Policy CRTC 2010 167 and Broadcasting Order CRTC 2010 168, 2012 SCC 68 decision, the 5 to 4 majority of the Court ruled the CRTC did not have the jurisdiction to implement the proposed value for signal regime. First, because a contextual reading of the provisions of the Broadcasting Act demonstrated that they were not meant to authorize the CRTC to create exclusive rights for broadcasters to control the exploitation of their signals or works by retransmission. Second, the proposed regime would conflict with specific provisions enacted by Parliament in the Copyright Act.

The Broadcasting Act grants the CRTC wide discretion to implement regulations and issue licences with a view to furthering Canadian broadcasting policy as set out in the Broadcasting Act.  The Court ruled, however, in reasons that will have applicability beyond far beyond the facts of the case, that that no provision of the Broadcasting Act expressly grants jurisdiction to the CRTC to implement the proposed regime, and it was not sufficient for the CRTC to find jurisdiction by referring in isolation to policy objectives in s. 3 and deem that the proposed value for signal regime would be beneficial for the achievement of those objectives.

The Court went on to rule that even if jurisdiction for the proposed value for signal regime could be found within the text of the Broadcasting Act, the proposed regime would conflict with specific provisions enacted by Parliament in the Copyright Act. The Court gave three reasons for this holding.

First, the value for signal regime conflicts with s. 21(1) of the Copyright Act because it would grant broadcasters a retransmission authorization right against BDUs that was withheld by the scheme of the Copyright Act.  A broadcaster’s s. 21(1)(c) exclusive right to authorize, or not authorize, another broadcaster to simultaneously retransmit its signals does not include a right to authorize or prohibit a BDU from retransmitting those communication signals. It would be incoherent for Parliament to set up a carefully tailored signals retransmission right in s. 21(1), specifically excluding BDUs from the scope of the broadcasters’ exclusive rights over the simultaneous retransmission of their signals, only to enable a subordinate legislative body to enact a functionally equivalent right through a related regime. According to the Court:

In my view, s. 21(1) represents the expression by Parliament of the appropriate balance to be struck between broadcasters’ rights in their communication signals and the rights of the users, including BDUs, to those signals.  It would be incoherent for Parliament to set up a carefully tailored signals retransmission right in the Copyright Act, specifically excluding BDUs from the scope of the broadcasters’ exclusive rights over the simultaneous retransmission of their signals, only to enable a subordinate legislative body to enact a functionally equivalent right through a related regime.  The value for signal regime would upset the aim of the Copyright Act to effect an appropriate “balance between promoting the public interest in the encouragement and dissemination of works of the arts and intellect and obtaining a just reward for the creator” (Théberge, at para. 30).

Second, a further conflict arises between the value for signal regime and the retransmission rights in s. 31, which creates an exception to copyright infringement for the simultaneous retransmission by a BDU of a “work” carried in local signals. According to the Court:

As discussed above, s. 31 creates an exception to copyright infringement for the simultaneous retransmission by a BDU of a work carried in local signals.  However, the value for signal regime envisions giving broadcasters deletion rights, whereby the broadcaster unable to agree with a BDU about the compensation for the distribution of its programming services would be entitled to require any program to which it has exclusive exhibition rights to be deleted from the signals of any broadcaster distributed by the BDU.  As noted above, “program[s]” are often “work[s]” within the meaning of the Copyright Act.  The value for signal regime would entitle broadcasters to control the simultaneous retransmission of works, while the Copyright Act specifically excludes it from the control of copyright owners, including broadcasters…

The value for signal regime would rewrite the balance between the owners’ and users’ interests as set out by Parliament in the Copyright Act.  Because the CRTC’s value for signal regime is inconsistent with the purpose of the Copyright Act, it falls outside of the scope of the CRTC’s licensing and regulatory jurisdiction under the Broadcasting Act.

Third, the value for signal regime would create a new right to authorize and prevent retransmission, in effect, amending the copyright conferred by s. 21. Thus the value for signal regime would create a new type of copyright and would do so without the required Act of Parliament, contrary to s. 89. Section 89 of the Act provides that

No person is entitled to copyright otherwise than under and in accordance with this Act or any other Act of Parliament, but nothing in this section shall be construed as abrogating any right or jurisdiction in respect of a breach of trust or confidence.”

According to the Court, s. 89 effectively pre-empts an attempt by any legislative body other than Parliament from enacting a copyright like right:

The deliberate use of the words “this Act or any other Act of Parliament” rather than “this Act or any other enactment” means that the right to copyright must be found in an Act of Parliament and not in subordinate legislation promulgated by a regulatory body. “Act” and “enactment” are defined in s. 2 of the Interpretation Act, R.S.C. 1985, c. I-21, where “Act” means an Act of Parliament; and “enactment” means an Act or regulation or any portion of an Act or regulation.

The definitions confirm that Parliament did not intend that a subordinate regulatory body could create copyright by means of regulation or licensing conditions.

Contrary to s. 89, the value for signal regime would create a new type of copyright by regulation or licensing condition.  Sections 2 and 21 of the Copyright Act define copyright in a communication signal to include the sole right to authorize another broadcaster to retransmit it to the public simultaneously with its broadcast. Authorizing simultaneous retransmission is then an aspect of copyright, although the right under the Copyright Act is limited to authorizing only specific defined entities, other broadcasters.  In light of the legislative history discussed above, this limitation on copyright appears to be the result of a specific Parliamentary choice not to change the balance struck in the Copyright Act between broadcasters and BDUs.  The value for signal regime would create a new right to authorize retransmission (and correspondingly prevent retransmission if agreement as to compensation is not achieved), in effect, amending the copyright conferred by s. 21.  Thus the value for signal regime would create a new type of copyright and would do so without the required Act of Parliament, contrary to s. 89.

My colleagues assert that there are functional differences between copyright and the proposed regulatory scheme.  With respect, the differences that they point to do not alter the fundamental functional equivalence between the proposed regime and a copyright.  Section 21 of the Copyright Act empowers broadcasters to prohibit the retransmission of their signals if certain conditions are met; the value for signal regime does exactly the same thing.  My colleagues are correct that the CRTC cannot, through the value for signal regime, amend s. 21 of the Copyright Act.  However that is precisely what the proposed regime does.  Parliament could have imposed conditions that are the same, or similar to the value for signal regime in s. 21 in the same way it imposed limits in s. 31 on the copyright it granted in respect of retransmission of works, had it intended broadcasters to have such a right.  Describing this new right granted to broadcasters under the value for signal regime as a series of regulatory changes does not alter the true character of the right being created.  Not calling it copyright does not remove it from the scope of s. 89.  If that type of repacking was all that was required, s. 89 would not serve its intended purpose of restricting the entitlement to copyright to grants under and in accordance with Acts of Parliament.