Federal Court Rules on Legality of Internet File Sharing

On March 31, 2004, the Federal Court, Trial Division, released a much-anticipated ruling dealing with online music sharing services and the rights of privacy of internet users. The terms of the ruling, that uploading and downloading music in the form of MP3s is not an infringement of copyright in Canada if the copy of the music is used for the copier's own personal use, comes as a surprise to many.

This issue was initially broached in the United States when the music recording industry were initially successful in forcing ISPs to turn over the names of people who were alleged to be infringing copyright by sharing MP3 songs over the Internet - a higher court eventually overturned the decision.

The ruling released by the Federal Court in Canada on this issue deals with the same point. 17 companies in the recording industry, including BMG Canada Inc., Sony Music Entertainment (Canada) Inc. and Universal Music Canada Inc., had made a motion before the Federal Court to require a number if internet service providers (ISPs) to provide identities or other information pertaining to 29 of the customers of the ISPs who had each been determined to be heavy users of Internet peer to peer file sharing software and sites to download or exchange copies of music files over the Internet. The primary defence raised by the Defendants in the motion was that the ISPs could not be forced to disclose the identities of users as it would be in contravention of Canada's privacy legislation (PIPEDA).

The Court, in BMG Canada Inc. et al. v. John Doe et al., dealt at some length with the act of uploading or sharing songs using peer to peer software. In a separate decision by the Copyright Board of Canada from December, 2003, it was held that certain copying of musical recordings did not infringe copyright when the sound recording was copied "onto an audio recording medium for the private use of the person who makes the copy" because there was a tariff in place in Canada that compensated the owner of the copyright by placing levies on blank recording media. It has been suggested that the Copyright Board decision appears to suggest that the downloading of MP3s on the internet for the copier's own personal use was not an infringement of copyright since a tariff levy was in place to compensate rights holders for this type of activity. In this decision, the Copyright Board said that the liability of the person uploading, distributing or communication the music through the peer-to-peer software was not in issue. It appeared then, leading up to the present decision, that if someone in Canada downloaded music off of the Internet for their own private use, then that was not an infringement of copyright in Canada because it was exempted under the act.

However, in order to download music from the Internet, someone had to upload that same music and many people just assumed that this was an infringement of copyright. Many thought the decision given by the Federal Court on Wednesday would deal primarily with the privacy issue, but the Court said in its decision that there was no evidence of any copyright infringement. The Court confirmed the Copyright Board's opinion that downloading a song for personal use does not amount to infringement and went even further to say that merely placing personal copies of recorded music into shared directories which were accessible by other computer users via a peer-to-peer service was neither distributing or authorizing the reproduction of sound recordings and therefore not an infringement of copyright.

The practical effect of this decision is that it appears that in Canada, for the time being, people can freely make music recorded as MP3s available on the internet using peer-to-peer software and download music recorded as MP3s using peer-to-peer software for their own personal use without committing a copyright infringement. There is an appeal period during which the recording companies could appeal the decision.

On April 13, 2004, the Canadian Recording Industry of Canada announced they had filed an appeal to the decision, arguing that the decision was in error on a number of legal bases.

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