By Ahmad Hathout
The result of two lawsuits filed in Federal Court could increase pressure on the federal government to clarify in the Copyright Act whether non-profit charities that play copyrighted music should pay royalties, according to a Heritage briefing document obtained by Cartt.
Last summer, the Society of Composers, Authors and Music Publishers of Canada (SOCAN) filed the lawsuits against two major annual music festivals – Ottawa Bluesfest and Festival D’ete de Quebec (FEQ), the largest outdoor festival in the country operated by Festival d’été international de Québec Inc. – for allegedly permitting the playing of copyrighted music without paying royalties to the non-profit performance rights organization representing more than 175,000 songwriters, composers and music publishers. While the festivals pay artists for their live performances, SOCAN grants licences and collects royalties for songwriters, composers and publishers who don’t get paid if the collective doesn’t.
SOCAN filed the suits during the 2025 festivals alleging the organizations failed to submit report forms and pay royalties from 2022 to 2024.
“As a result of the Defendants’ conduct, the Defendants have unjustly profited and will continue to make a profit, while SOCAN has suffered and will continue to suffer harm, including damages in the form of lost royalties,” the organization alleges in its statements of claim, telling the court they are owed three per cent of gross receipts from ticket sales.
The organization is asking for the court to find copyright infringement and to order the payment of the value of unpaid royalties or statutory damages between three and 10 times the value of the rate set by the Copyright Board under Tariff 4.A.
Ottawa Bluesfest and the FEQ filed defenses claiming that the allegations do not apply to them under section 32.2 (3)(a) of the Copyright Act, which exempts “charitable objects” of charities from paying any compensation for the public performance of musical works.
“As a charitable organization, the Defendant shall not be held liable to pay any compensation for the live performance in public of a musical work in furtherance of an educational or a charitable object, pursuant to section 32.2(3) of the Copyright Act,” Bluesfest claims in its defense. “This includes the performance, if any, of SOCAN Musical Works at Ottawa Bluesfest … Ottawa Bluesfest is a charitable object of Bluesfest.”
The festivals claim that they told SOCAN many years ago that they were exempt under the law and allege they never heard again from the performing rights organization – until they were served last summer.
The resolution to the cases will likely come down to the court’s determination as to whether these festivals are “charitable objects,” as SOCAN already acknowledges that the festivals are registered by the Canada Revenue Agency as charities, which are determined by the Income Tax Act.
“Both Ottawa Bluesfest and the Festival d’ete de Quebec include the operation of a music festival as a charitable purpose in their governing documents,” said an August 2025 memorandum from Heritage Deputy Minister and lawyer-by-training Isabelle Mondou to then-Minister Steven Guilbeault about the lawsuits. “However, it is unclear whether ‘charitable objects’ in the Copyright Act are intended to be synonymous to ‘charitable purposes’ as defied in the Income Tax Act.”
SOCAN appeared before the Standing Committee on Canadian Heritage in June 2018 and argued that section 32.2(3) created a loophole that was allegedly being exploited by charities and recommended that the government change the exception to apply only where the music is used without any intent of monetary gain and to clarify that charitable status under the Income Tax Act is not in itself sufficient to allow the exception.
The committee, in fact, recommended that the exception for charitable organizations in subsection 32.2(3) of the Copyright Act “be clarified to apply strictly to activities where no commercial monetary gain is intended.”
“To date, the Collective [SOCAN] has repeatedly spoken to Canadian Heritage officials about seeking amendments to ‘charitable exception’ found at section 32.2(3) in the Act that they claim is being exploited by multimillion-dollar charities who engage in large-scale music events, like music festivals, to avoid paying tariffs,” the memo continues. “The result of this litigation may also result in further calls to amend the Act to clarify the exemption with each side seeking clarification of the provision to advance their interpretation.”
According to the memo, the charitable exemption has been challenged twice before, the most relevant case being a 1953 Supreme Court of Canada decision regarding dances performed at the Kiwanis Club, whose profits were intended to benefit underprivileged children. The judge ruled that the performance of musical works was not in furtherance of the organization’s charitable object.
Heritage/Culture will also need to wrestle with the festivals’ public funding if the court rules against them.
Among other public dollars, Ottawa Bluesfest is a recipient of the Canada Arts Presentation Fund (CAPF), from which it received $448,000 since 2020, according to an annex appended to the memo. The annex notes that the charitable returns of the organization show it received $660,219 in non-receipted donations, $489,088 in government funding, and $24.1 million in earned revenue. The organization reported 84 per cent ($20.6 million) of its expenses as charitable, the annex says, with the remainder used for admin, management and fundraising.
FEQ has received $550,000 per year from the CAPF and $52,000 over the three most recent years from the Canada Music Fund (CMF) via Musicaction, according to the annex. The charitable returns, according to the annex, show it received approximately $5 million in government funding and had roughly $47.6 million in earned revenue. It reported roughly 88 per cent ($46.6 million) of its expenses as charitable, with the remainder going to management and admin. It had ticket sales of approximately $43.5 million in 2024, the annex says.
“If these organizations are found to have been non-compliant in the payment of royalties, they would also be in default of their funding agreements under the Canada Arts Presentation Fund which may require action by Canadian Heritage,” the memo says.
“The program requires all applicants to attest that they will ‘act in compliance with applicable statutes, laws, bylaws, regulations, orders, codes, standards, directives and guidelines governing the activities for which funding is being sought,” the memo continues, addressing the CAPF. “The final report form also requires funding recipients to ‘certify that all of the Recipient organization’s obligations in relation to the Contribution or Grant Agreement have been fulfilled; including… that the artists’ fees and applicable copyright fees have been paid in full.’”
Ottawa Bluesfest and FEQ will run in July this year.
Photo via ottawafestivals.ca
