Exempting Storage Media from Canada's Private Copying Levies


The Canadian government has announced that it will be implementing regulations under the Copyright Act (Canada) which have the effect of "exempting microSD memory cards from copyright levies". As the press release notes, MicroSD cards are "removable memory devices commonly used in smart phones". The regulations are scheduled to be introduced in the fall of 2012. Why does the Canadian government need to exempt microSD cards from copyright levies? Are other types of memory storage exempt from those levies? These questions, and more, can only be answered by a quick traipse through Canada's "private copying" regime.

The "private copying" regime is found in Part VIII of the Copyright Act (Canada), comprising Sections 79 to 88. In broad strokes, the provisions provide that

(1) copying a "song" (comprised of a composition, performer's performances and a sound recording) onto an "audio recording medium" for private use of the person who makes the copy does not constitute infringement of copyright;

(2) certain eligible people or entities who hold copyright interests in the aforementioned elements of the song being copied (i.e., the owner(s) of the copyright in the composition, the owner(s) of the copyright in the performances and the owner(s) of the copyright in the recording) are entitled to "equitable remuneration" for the copying which is sheltered by item (1); and

(3) manufacturers of "audio recording medium[s]" must pay a levy to the relevant collecting society for purposes of distribution to the people entitled to equitable remuneration as described in item (2).

In non-legal terms: you are allowed to make a copy of a song onto an audio recording medium, and that act of copying will not constitute copyright infringement, but in exchange for that, the people who have copyright interests in the song are entitled to be paid compensation by a collective, which in turn collects money from the manufacturers of the audio recording medium.

[There are a variety of embellishments, qualifications, exceptions and other material provisions in the private copying regime, but we need not wade quite that far into the thicket for purposes of this post.]

At the heart, then, of the "private copying" regime is the term "audio recording medium". What is that? Section 79 of the Act defines it as "a recording medium, regardless of its material form, onto which a sound recording may be reproduced and that is of a kind ordinarily used by individual consumers for that purpose, excluding any prescribed kind of recording medium".

So while the definition of audio recording medium is relatively open-ended, the government can exempt certain types of recording media from being subject to the levy system created by Part VIII - and that is what they indicated they will be doing with microSD cards.

Why single out microSD cards? Therein lies a tale. The Canadian Private Copying Collective (CPCC) collects "private copying" levies from manufacturers. To do so, the CPCC needs to have its tariffs (i.e., the instrument which sets out the amount of the levy) certified by the Copyright Board of Canada. The most recently certified (and current) tariff (for the year 2011 - subsequently extended to cover 2012 and 2013) collects levies only on a limited number of media: namely, CD-R, CD-RW, CD-R Audio or CD-RW Audio. However, if you're inclined to look at the proposed tariff for 2012-2013, you'll find that the CPCC is hoping to extend the levy to cover "electronic memory cards". The proposed 2014 tariff is even more specific: instead of using the term "electronic memory cards", it substitutes the term "microSD memory cards". In short, the government has just indicated that it is going to forestall the expansion of the levy to microSD memory cards by implementing the regulation.

The microSD memory card is the only prescribed form of audio recording medium - no other audio recording medium has thus far been given similar attention. Presumably microSD cards are attractive to the CPCC (and the rights-holders it represents) because of their ubiquity in mobile phones and other devices and, consequently, the extent to which they are used to store music for playback on those devices. According to the government's press release, allowing a levy on microSD cards is "not only unwarranted but unfair to Canadian consumers".

(For those trying to understand quite why the CPCC's levies only currently apply to CD-R, CD-RW, CD-R Audio and CD-RW Audio, you'll need to read the December 13, 2003 decision of the Copyright Board and the Federal Court of Appeal's decision in Canadian Private Copying Collective v. Canadian Storage Media Alliance, 2004 FCA 424.)