By Ahmad Hathout
The Copyright Board of Canada incorrectly went outside the direction it was given by the Federal Court of Appeal when it was tasked with correcting errors it made in calculating the royalty rates broadcasters pay to retransmit distant signals, the high court ruled late last week.
To distribute distant over-the-air television signals, Canadian cable providers (BDUs) must pay royalties to the copyright owners of the programs carried on those signals. The board — which uses a set of Canadian and U.S. specialty services as proxies to approximate the content of these signals — sets these rates where negotiations fail, such as in this case, where the cable providers and copyright consortium could not agree on a rate for the signals retransmitted between 2014 and 2018.
The board, which made adjustments in this case based on the profit margin of these services, had initially lowered those rates in August 2019, but was told after review by the appeal court to relook at two calculation errors it made – including not using more recent data. Upon second review, the board further lowered the rate for cable providers with more than 6,000 subscribers from $1.17 for the years 2016 to 2018 to $1.12 per subscriber, per month. The decision came as a shock to the copyright consortium that originally challenged the decision. The board said it felt it had a duty to correct the additional errors beyond the two identified by the court when it spotted them upon second review.
In a decision Thursday, the appeal court agreed with the consortium, which challenged the scope of the second decision early last year.
“I see no rational basis for concluding that this Court contemplated that the Board’s redetermination would go beyond the issues addressed in the [original court decision] and revisit issues that had not been addressed before it,” the court ruled Thursday, adding a conclusion that a second decision allowed for corrections beyond the two errors “is unreasonable, and smacks of goal-oriented reasoning.”
In its second decision, the board applied a 25 per cent discount to U.S. specialty services and a 10 per cent discount to Canadian specialty services. The appeal court agreed with the consortium that both should only be at 10 per cent.
While the appeal court sent the initial decision to the board for review, it will not do that this time. Instead, and on the urging of the copyright consortium, it is ordering the board to set the rates at the cap on a per subscriber, per month basis identified in the second board decision for large systems (over 6,000 subscribers): $1.06 for 2014, $1.14 for 2015, $1.22 for 2016, $1.30 for 2017, and $1.38 for 2018.
“The CAB is happy with the Court’s decision, and believes it will be positive for Canadian broadcasters,” Kevin Desjardins, president of the Canadian Association of Broadcasters, told Cartt. “We are pleased to see that the Court saw the merits of the collectives’ arguments, and we are now attempting the ascertain the timelines for bringing this decision into force.”
