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Why Re:Sound v. Motion Picture Theatre Associations of Canada, 2012 SCC 38 Is Not Catastrophic
Why Re:Sound v. Motion Picture Theatre Associations
of Canada, 2012 SCC 38 Is Not Catastrophic
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Martin Gladu

The “Copyright Pentalogy” has drawn a lot of attention in the intellectual property

community. One of the cases was Re:Sound (2012 SCC 38), which came as a disappointment to some stakeholders. Here is one of the many negative comments one could read days after the Supreme Court of Canada (SCC) published its decision:

(…) Cela dit, la Cour suprême n’a pas partagé l’opinion de Ré:Sonne sur la question à savoir si la diffusion (au cinéma ou à la télévision) des enregistrements sonores préexistants intégrés à la bande sonore d’un film ou d’une émission de télévision donnait droit à la perception d’un tarif de rémunération équitable et y a répondu par la négative.

Cette réponse défavorable est fort décevante pour les artistes interprètes qui se voient traités différemment des auteurs et des compositeurs, lesquels perçoivent des redevances pour de telles utilisations de leurs œuvres par les cinémas et les télévisions. Comment justifier que les uns aient droit à des redevances alors que les autres n’y ont pas droit, et ce, pour la même utilisation de leurs créations ? Faudra-t-il demander au gouvernement de modifier la loi afin de remédier à cette iniquité? Il semble bien que ce soit la seule avenue possible, mais qu’elle soit impraticable pour l’instant compte tenu de la récente sanction royale du projet de loi C-11 qui vient tout juste de modifier la Loi sur le droit d’auteur, du délai de cinq années avant que la loi ne soit réexaminée et surtout…compte tenu du gouvernement en place () SOURCE : Dur été pour le droit d’auteur by Marie-Denise Pelletier, www.artisti.ca, October 2012

This article offers another point of view to this statement and similar ones.

Background

Re:Sound concerned the interpretation of the term “sound recording” in the context of a pre-existing phonogram that is synchronized to an audiovisual work, such as a television program or a cinematographic work, and whether featured and non-featured performers could get a tariff for the use of pre-recorded music in public performances and communications to the public by telecommunication of such audiovisual works.

The proposed tariff was rejected by the Copyright Board on the basis that the definition of “sound recording” in the Copyright Act specifically “excludes any soundtrack of a cinematographic work where it accompanies the cinematographic work.” The argument is that if a performer’s performance that has been fixed on a phonogram does not count as a “sound recording” when it is synchronized to an audiovisual work, then no tariff should be collected for the performer’s performance when a movie or television program is broadcast. The Board’s decision was upheld by both the Federal Court of Appeal and the Supreme Court.

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Observations

Re:Sound is not as catastrophic as some say it is. Here is why.

Most collective bargaining agreements contain provisions covering what is commonly referred to as “new use” and “re-use,which both call for supplementary wages.

“New use” fees kick in when music initially recorded for one market subsequently shows up in a different market and for a different purpose than it was originally intended for. A recording used in a film soundtrack, for example, is deemed a “new use.”

“Re-Use” fees are paid in cases where a performer’s recorded performance is re-used “as is.For example, if a jingle that one has played on is broadcast for a second thirteen week run, then re-use fees might apply.

So, if the recording session that produced the track that is used in a movie or in a television program was made under such collective bargaining agreements, then these provisions are enforced by the unions.

Moreover, many commentators seem to forget that uses of a protected sound recording in cinematographic works and in television programs are negotiated between the holder of the copyright on the sound recording and the production company or network. Whatever conditions they agree on are set in a synchronization license.

In most recording contracts, the featured performer is entitled to half the royalties his/her record company collects from third parties. Not only does the record company has the fiduciary duty to credit these royalties to the performer’s account, but chances are these royalties are greater than those a neighbouring rights collective such as Re:Sound might distribute to the featured performer.

Now, this contractual obligation obviously does not apply to non-featured performers. The latter are entitled only to a small fraction of half the royalties Re:Sound pay to featured performers (the beneficiaries of the other half are the record companies). But if the featured performer’s recording was made under a collective bargaining agreement, then the record label will pay “new use” fees to the signatory of the agreement, who will credit its membersaccounts, to wit, the non-featured performers.

Let’s use an example.

Say Brad Paisley’s recording of his own song “Celebrity” is used in a movie scene, and say the movie is produced by Columbia Pictures. The latter will secure two synchronization licenses: one covering the composition (from Paisley’s publisher) and one covering the sound recording (from Arista Records). In its determination of the license fee it will ask Columbia Pictures, Arista will consider the different markets the licensee will have asked to be covered in the agreement. If Columbia Pictures asks for a quote for, say, television broadcasts, movie theaters, and online, then Arista will charge more than if it only asks for

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movie theaters. In short, by way of the synchronization license Arista will collect at the source the royalties that could have otherwise been collected by a collective under one or many public performance tariffs, thereby saving on that collective’s commission fees.

Now, in addition to Paisley, who sings and plays guitar on the track, a bunch of Nashville session musicians were retained by Arista and paid union wages. If “Celebrity” is played at a skating rink or on Sirius/XM Canada, then Re:Sound will collect all the rights to equitable remuneration on behalf of Paisley, the session musicians, and Arista. But since the track is used in a cinematographic work, then Arista will go a different route and make two payments: 50% of the license fee paid by Columbia Pictures will be credited to Paisley’s account with the label, and “new use” fees will be paid to the musicians’ union. Why will it pay “new use” fees? Because it is a signatory of the Sound Recording Labour Agreement. And, per the latter, the label will also remit a percentage of part of its sales to the Sound Recording Special Payments Fund, who, in turn, will pay the session musicians.

So, if the record company and the union both conduct their business properly, to wit, follow the collective bargaining agreement and the featured performer’s recording contract to the letter, then everyone gets paid their due. As a matter of fact, ACTRA had addressed this issue three years before the SCC rendered its decision in a document entitled “Reforming Canada’s Copyright Act to Protect Performing Artists in the Digital World”:

Primacy of Collective Bargaining Agreements

There is a need to introduce the rights of performers in a manner that reflects and respects the collective bargaining system that has been used by the industry to regulate some of these matters.

Accordingly, ACTRA believes that where the performance is governed by the terms of an existing collective bargaining agreement that provides for remuneration when the material is used in one of the fields in which the performer has an economic right, the performer should have no right to file a tariff with respect to such use. Where no collective bargaining agreement is in place or where remuneration for use of the material in the field is not provided in an agreement or is not fair in the circumstances, the performer should have the right to equitable remuneration for such use and the Copyright Board should be empowered to determine the appropriate royalty. The choice between seeking remuneration through the collective bargaining process or a tariff filed with the Copyright Board should rest exclusively with the performers collectively: the choice can be exercised through an appropriate copyright collective.

In closing, do not let anyone convince you that Re:Sound is a catastrophe because it is not. Those that say it is are just unaware of the aforementioned “primacy of collective bargaining agreements.”

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