http://story.news.yahoo.com/news?tmpl=story&u=/nm/20040630/wl_canada_nm/canada_internet_col&e=1
OTTAWA (Reuters) - Canada's music industry suffered a second legal defeat in three months on Wednesday when the Supreme Court rejected its argument that Internet companies should pay royalties for pirated music. The high court rejected an argument from the music industry that Internet service providers, such as BCE Inc. and Time Warner Inc.'s AOL, do not have to pay royalties to musicians and their publishers to cover music their customers download.
"The capacity of the Internet to disseminate works of the arts and intellect is one of the great innovations of the information age," Justice Ian Binnie wrote for the court. However, reflecting the tension in this case, he said: "Its use should be facilitated rather than discouraged, but this should not be done unfairly at the expense of the creator of the works."
Binnie said it should not be the Internet industry that has to pay the musicians.
"It is clear that Parliament did not want copyright disputes between creators and users to be visited on the heads of the Internet intermediaries, whose continued expansion and development is considered vital to national economic growth," he said. Tom Copeland, chairman of the Canadian Association of Internet Providers, said a contrary ruling would have been a huge blow to the sector.
"I'm also an ISP and, with both my wife and me working in the business, that would have meant that we wouldn't have been taking home a salary," he told Reuters.
"Despite what the perceptions are, the margins in this industry are slim to none."
In a related case on March 31, the Federal Court of Canada rejected a request that Internet service providers identify music swappers so music companies could go after them. Wednesday's court decision concludes that the Internet companies are mere conduits of the information and it would be impractical to monitor the vast amount of material moving through the Internet.
"We are told that a large on-line service provider like America Online delivers in the order of 11 million transmissions a day," Binnie said. He also said it was even okay for the companies to cache music that their customers are downloading as this was a matter of delivering faster and more economic service.
"This decision is a victory for Canadians who have come to rely on the Internet as an increasingly important part of their daily lives," the Canadian Cable Television Association said.
"To impose copyright liability on ISPs for providing access, hosting, caching and transmission services would have resulted in significantly higher costs to consumers and would have discouraged the investment and innovation necessary for the development of the Internet economy in Canada."
Jeff Leiper, editor of Decima Reports -- trade newsletters for Canada's communication industry -- said the court realized how putting a tariff on the industry could have affected the affordability of the Internet to Canadians.
"It would have been a 3.5 percent take on gross revenues," he said. "When you're talking ISPs who have revenues...in the billions, that's a significant amount of money."
