Mobile carriers sue SOCAN for return of $15M in ringtone royalties

Major Canadian mobile carriers launched lawsuit against copyright collective the Society of Composers, Authors and Music Publishers of Canada (SOCAN), seeking the return of $15 million in royalty payments for ringtone downloads. The claim, filed Nov. 13 by Rogers Communications Inc., Telus Corp., Quebecor Media Inc., and BCE Inc. subsidiary Bell Mobility, said Supreme Court decisions on copyright this summer mean the carriers should never have paid communications royalties for ringtone downloads, which applied as far back as 2003. The carriers argue in the claim that a Copyright Board royalty called Tariff 24, first certified by the board in 2006 for the years 2003-2005, has no basis in law. “Tariff 24 as it applies to ringtones has no legal foundation. The Board's certification of Tariff 24 constituted a jurisdictional violation and was ultra vires of the Copyright Act,” the claim said. The carriers said SOCAN “has been unjustly enriched” by royalty payments paid “under a mistake of law” and that restitution of $15 million should be returned to the companies, according to the claim, filed with the Federal Court in Ottawa and obtained by The Wire Report from the court. Mobile subscribers can purchase and download ringtones for their handsets from their wireless carriers. According to the Copyright Board's Tariff 24 certification for the years 2009-2013, the mobile carriers were to pay royalties of five per cent of ringtone revenues from mobile subscribers or a minimum fee of five cents per ringtone. In two related copyright decisions issued in July, Rogers Communications et al. v. SOCAN and Entertainment Software Association v. SOCAN, the Supreme Court said music rights holders cannot charge communications royalties from services offering file downloads containing copyrighted music. The communication royalty is a “performance” tariff collected in addition to a reproduction tariff for making copies. The Supreme Court emphasized the importance of technological neutrality and said “an additional layer of protections and fees” should not be imposed “based solely on the method of delivery of the work to the end user.” The mobile carriers said in the claim that, as a result of the Supreme Court decisions, “downloading ringtones does not infringe … the Copyright Act and never has.” SOCAN also collected a communication royalty collection under Tariff 22 from music download services like Apple Inc.'s iTunes. The collective told The Wire Report in January that, of the Tariff 22 communication rights royalties collected from music downloads services, it did not distribute the funds to its members because it was waiting for the Supreme Court ruling. Paul Spurgeon, general counsel and vice-president of legal services at SOCAN, said in an emailed statement to The Wire Report Wednesday that most of the Tariff 22 amounts have now been refunded. Spurgeon said the copyright collective intends to fight the lawsuit from the carriers and that the collective distributed Tariff 24 royalties to its members after the Supreme Court decided in 2008 not to hear a challenge of the tariff. "When the Supreme court finally denied the leave to appeal that was sought by the ringtone suppliers, SOCAN distributed the amounts that had been collected and that were suspended pending the Supreme Court's decision. That distribution was made in 2009," Spurgeon said. "SOCAN intends to defend the lawsuit and counterclaim for unpaid royalties." sdoyle@thewirereport.ca --- CORRECTION: An earlier version of this story incorrectly identifed a Supreme Court case as ESA v. Rogers. It is ESA v. SOCAN.

Mobile carriers sue SOCAN for return of $15M in ringtone royalties

News | November 14, 2012

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Mobile carriers sue SOCAN for return of $15M in ringtone royalties

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