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Focus: Is shutting down TV service victory for broadcasters?

Focus on: Intellectual Property Law
A judge’s decision to shut down a new media TV service for copyright violations could be a victorious battle for traditional broadcasters in a losing war, says a Toronto entertainment lawyer.

In 2251723 Ontario Inc. v. Bell Canada, Ontario Superior Court Justice Frederick Myers ordered upstart television and Internet provider VMedia to stop streaming Bell’s CTV channels live over the Internet as part of a new service that allowed customers to access its basic TV offering without a traditional cable subscription.

William Genereux, principal at Genereux Law, says the decision shows that the “power of disruption has not yet affected” the TV industry in Canada.

“Some would take comfort in that,” he adds.   

However, Genereux, a former chairman of the Ontario Bar Association’s entertainment, media and communications law section, says decisions like this one can only delay disruption, rather than prevent it from happening altogether.    

“It’s difficult to predict the future, but you have to be realistic and say things don’t stay the same forever,” he says. “Obviously, the technology is evolving very quickly, and is presenting new opportunities all the time. To use a hockey analogy, the goalie is constantly facing shots on goal, and eventually someone is going to start scoring against him.”

“There’s always a sense of the courts and regulators playing catchup when it comes to technology,” adds Ryan Keller, a digital media lawyer with Toronto firm Duarte Spiel LLP.
Toronto-based VMedia began offering the now-banned service in September to customers with a Roku app, which allows users to watch content streamed over the Internet on their television. For $17.95 per month, viewers could use the Roku app to get access to the same package of about 20 TV channels VMedia offers to subscribers using its own proprietary set-top box, which included CTV and CTV2.

Bell objected to the offering, claiming it breached s. 31 of the Copyright Act, which deals with retransmission of over-the-air signals. Under that section, cable companies and other licensed broadcasters are typically allowed to simultaneously retransmit signals received over the air on their own services without paying any royalties. But in 2002, the federal government altered the law to exempt Internet broadcasters.

Myers’ decision explains that the carve-out for “new media retransmitters” came in response to the Canadian Radio-television and Telecommunications Commission’s decision not to regulate Internet broadcasts. Any person whose broadcast was legal “only” thanks to the CRTC policy now needs the consent of copyright holders to retransmit signals under s. 31 of the Copyright Act.

VMedia countered that since it holds Broadcast Distribution Undertaking licences under the Broadcasting Act, it should not be considered a “new media retransmitter,” but Myers disagreed.  
“VMedia’s argument runs squarely into the CRTC’s determination that internet broadcasting by a licensee is a separate undertaking from its licensed broadcasting undertakings.

“If new media or internet broadcasting is a separate undertaking from VMedia’s BDU licenses, then VMedia’s use of the internet is indeed only lawful due to the Exemption Order and therefore it does not qualify for the compulsory license in s.31 (2) of the Copyright Act,” the judge wrote.

His decision confirmed that VMedia had infringed Bell’s rights under the Copyright Act by broadcasting its channels over the Internet, and it permanently enjoins them from doing so again in the future.

The judge also awarded Bell $150,000 in costs on a partial indemnity basis, an amount he said should not have surprised VMedia given its “hardball tactics” of launching the service in the face of “such a clear legislative regime,” as well as a contract it had previously signed with Bell agreeing to pay for Internet retransmission rights.

“VMedia took a very aggressive business position. It had to know that Bell would bring to bear all of the legal firepower that it could muster,” Myers concluded.

Keller says he was struck by the judge’s determination to stick to the law and distance himself from matters of broadcast policy.

“There are no broad statements that could be interpreted as wading into that side of things,” Keller says.

Indeed, during the hearing of the application, Myers reportedly questioned VMedia’s lawyers on why they were in court instead of at the CRTC, and he began his judgment by reiterating that courts do not set broadcasting policy.

Genereux says the current state of CRTC policy on Internet broadcasts meant VMedia always faced an uphill task to convince the judge that its new service complied.

“Just because technology makes something possible doesn’t mean it’s always a good idea,” he says.

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