Canada's recording industry has praised a ruling by the Supreme Court which shuts down the potential threat of copyright piracy havens; confirms that music rights holders in Canada need to be paid for music transmitted on the Internet from outside the country and calls for modernization of Canada's antiquated Copyright Act.

"Contrary to press reports on yesterday's Supreme Court decision on SOCAN's tariff for Internet Service Providers, the decision is not a 'set back' for the music industry," clarifies Richard Pfohl, General Counsel, Canadian Recording Industry Association (CRIA). "The Court clearly affirms that Canada's Copyright Act applies to the Internet. This is a very good outcome for Canadian record companies."

The record industry had intervened in the Society of Canadian Composers, Authors and Music Publishers (SOCAN) case on the issue of internationally transmitted music. This issue is distinct from the proposed ISP tariff, on which the record companies took no position.

"The recording industry intervened in this case on a simple principle," explains Mr. Pfohl, "that communications which travel across Canada's border, and are received here, should be subject to Canadian copyright law. In upholding our position, the Court has sent an important signal to off-shore music pirates that they won't get away with sending illegal materials over the Internet into Canada. The Court not only supported our position, but went much further in calling for long over-due change to Canada's copyright law."

The Supreme Court also signalled that it will not be sympathetic to those who "abuse" the Internet by taking music they haven't paid for, stating that this was not a case of "those who abuse the Internet to obtain 'cheap music'."

"The Supreme Court of Canada has now added its weight to the unanimous call of the all-party House of Commons Committee on Canadian Heritage to modernize Canada's copyright law. That committee's report called for Parliament to amend the Copyright Act and immediately ratify international treaties on digital copyright it signed on to more than seven years ago," stated Mr. Pfohl. The Standing Committee on Canadian Heritage released its Interim Report on Copyright Reform in May 2004.

The Supreme Court decision adds support to the position of CRIA and the Heritage Committee on adoption of key copyright reforms:

The Court supported adoption of a "notice and takedown" regime to clarify ISP responsibility and liability. The Court found that adoption of a "making available" right - one of the key reforms required of Canada to ratify the WIPO treaties on digital copyright protection - is consistent with the approach adopted by the Court.

Key quotes in the Supreme Court decision include the following (indicated by paragraph number):

• "Parliament's response to the World Intellectual Property Organization's (WIPO) Copyright Treaty, 1996, ("WCT") and the Performances and Phonograms Treaty, 1996, remains to be seen. In the meantime, the courts must struggle to transpose a Copyright Act designed to implement the Berne Convention for the Protection of Literary and Artistic Works of 1886, as revised in Berlin in 1908, and subsequent piecemeal amendments, to the information age, and to technologies undreamt of by those early legislators." (para. 43)

• "Canada is a signatory but not yet a party to the WIPO Copyright Treaty. This treaty responded to the development of the Internet and other on-demand telecommunications technology." (para. 65)

• "A more effective remedy to address this potential issue would be the enactment by Parliament of a statutory "notice and take down" procedure as has been done in the European Community and the United States." (para.127)

The decision, released yesterday by the Supreme Court, dealt in large part with a separate issue, a tariff on ISPs for Internet music usage applied for by SOCAN, a performing rights society. The record companies did not take a position on the SOCAN tariff. Record companies have worked to establish legitimate online music services under which actual music listeners purchase legal downloads or subscribe to music services.

CRIA reports that the Canadian music industry has experienced retail sales losses of in excess of $465 million since 1999, as well as staff layoffs of 25 per cent and more in the industry over the past year. More than 45,000 individuals are directly or indirectly dependent upon the health of the recording industry in Canada, including those in songwriting, recording studios, manufacturing, retailing, broadcasting, music publishing, concert promotion, management and many other primary and support services.

The Canadian Recording Industry Association (CRIA) is a non-profit trade association representing the interests of Canadian companies that create, manufacture and market sound recordings. CRIA's membership includes the major record companies, leading independent labels, and all manufacturers of compact discs and tapes. In all they represent 95 per cent of the sound recordings that are manufactured and sold in Canada.