Compo Co. Ltd. v. Blue Crest Music et al., [1980] 1 SCR 357

SUPREME COURT OF CANADA

Compo Co. Ltd. v. Blue Crest Music et al., [1980] 1 S.C.R. 357

Date: 1979-10-02

Compo Company Limited (Defendant) Appellant;

and

Blue Crest Music Inc., Husky Music Inc. and Acuff-Rose Publications, Inc. (Plaintiffs) Respondents.

1979: January 29, 30; 1979: October 2.

Present: Laskin C.J. and Martland, Ritchie, Pigeon, Dickson, Beetz, Estey, Pratte and McIntyre JJ.

ON APPEAL FROM THE FEDERAL COURT OF APPEAL

Copyright — Liability of person pressing records from master disc prepared by a third party — Meaning of "make a record" — Infringement of copyright of owner — Copyright Act, R.S.C. 1970, c. C-30, as amended, ss. 3, 4, 10, 12, 17, 19.

The appellant Compo Company Limited (Compo) entered into a contract with Canusa Records Inc. (Canusa) whereby Compo would press records for Canusa from a master acetate provided by the latter. Canusa obtained no licence from the respondents, the holders of the mechanical rights in the copyrighted work; nor did it obtain a statutory licence under s. 19 of the Copyright Act. Similarly Compo, as the presser of the records held no licence or grant of right either contractual or statutory for the production of the records. It was found at trial that Canusa had commit­ted a breach of the respondents' right under the Copyright Act and the question is now whether Compo has done so as well. In the Trial Division of the Federal Court Compo was exonerated on the ground that it did not "sell" records and therefore did not come within s. 19(1)(b) of the Act, and by reason that Compo would not know what royalties were payable under s. 19, Canusa alone having the information from which to determine the number of records sold to the public. The Court of Appeal, in allowing the appeal against the dismissal of the claim, took the view that while Canusa "caused" Compo to make the records and thereby infringed the respondents' copyright, Compo itself had, without the permission of the respondents who had the sole right to make the contrivances (records) in question, "made" the records. Hence the appeal to this Court.

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Held: The appeal should be dismissed.

The simple question is, did Compo, by taking the master acetate from Canusa and making therefrom the moulds and stampers, "make [a] record" within the meaning of ss. 3 and 17 of the Copyright Act and thereby infringe the copyright in the musical work of the respondents?

In the context of s. 3 of the Act the verb "to make" includes the direct sense of physically causing the record to come into being. The person who by means of stam­pers, dies or other devices and procedures, forms plastics and other materials into discs, and imprints thereon grooves and tracks "by means of which the work may be mechanically performed", has thereby within the mean­ing of s. 3(l )(d) made a record. Having determined that Compo did indeed "make" the record, Compo thereby, wittingly or unwittingly, breached the respondents' sole right as the owner of the copyright and is liable under the Act.

Ash et al. v. Hutchinson & Co. (Publishers), Ltd., et al., [1936] 2 All E.R. 1496; Baschet v. London Illus­trated Standard Company, [1900] 1 Ch. D. 73; G. Ricordi & Co., Inc. v. Columbia Graphophone Co. (1920), 270 F. 822; Edward B. Marks Music Corpora­tion v. Foullon (1948), 79 F. Supp. 664, affirmed (1949), 171 F. 2d 905; Reeve Music Co., Inc., and Robbins Music Corporation v. Crest Records, Inc. and Shelley Products Ltd. (1960), 285 F. 2d 546; Pickwick Music Corporation, et al. v. Record Productions, Inc. (1968), 292 F. Supp. 39; Leo Feist, Inc. et al. v. Apollo Records et al. (1969), 300 F. Supp. 32, affirmed (1960), 418 F. 2d 1249; Columbia Records of Canada Ltd. v. M.N.R. (1971), 71 DTC 5486; R, v, Canadian Pacific Railway Company, [1971] S.C.R. 821; Rexair of Canada Lim­ited v. The Queen, [1958] S.C.R. 577, referred to.

APPEAL from a judgment of the Federal Court of Appeal reversing a judgment of the Trial Divi­sion which had dismissed a claim for copyright infringement. Appeal dismissed.

D. J. Wright, Q.C., and D. H, MacOdrum, for the appellant.

R. T. Hughes, for the respondents.

The judgment of the Court was delivered by

ESTEY J.—Arising out of a rather complex set of facts is the simple issue as to whether a person who presses phonograph records thereby infringes

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the exclusive rights granted by s. 3 of the Copyright Act, R.S.C. 1970, c. C-30, to the holder of the copyright in the musical work in question when such pressing is done without the consent of the copyright owner or without a statutory licence under s. 19 of the Copyright Act.

The essential facts are these. The appellant Compo Company Limited (the defendant in these proceedings), hereinafter referred to as Compo, entered into a contract with Canusa Records Inc., hereinafter referred to as Canusa, whereby Compo would press records for Canusa. In the sequence of production of these records, Canusa first caused to be produced by other contractors a master tape on which was recorded a French version of a copyrighted musical work, namely the song "There Goes My Everything". From this tape other contractors produced a master acetate which is an aluminum disc coated with a cellulose acetate on which is cut in fine grooves a track which when placed in audio reproduction equipment would produce an audio representation of the aforemen­tioned musical work. Compo, utilizing the master acetate, produced a series of moulds and stampers or dies which they ultimately used in stamping equipment to produce the records in quantities as ordered by Canusa.

We are not here concerned with the detailed participation in the production of this master ace­tate by various other persons starting with the musicians and culminating in the engineers and technicians who actually produced the master ace­tate. It should be noted, however, that in this transitional stage, there is produced a tape record­ing of the musical work from which the stamping device is ultimately produced. By playing this tape recording, the musical work could be acoustically performed but the purpose of the tape is entirely technical and transitional in the sequence of events from the performance of the musical works in the recording studio by musicians to the delivery of the record for retail sale.

Canusa obtained no licence from the holders of the mechanical rights in the copyrighted work; nor did it obtain a statutory licence under s. 19 of the

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Copyright Act. Similarly, Compo, as the presser of these records held no licence or grant of right either contractual or statutory for the production of these records. It was found at trial that Canusa had committed a breach of the right of the respondent under the Copyright Act and the ques­tion now raised in these proceedings is whether Compo has done so as well.

The case turns around the interpretation of several sections of the Copyright Act of Canada, the principal ones being ss. 3, 4, 10, 12, 17 and 19. Section 3 provides as follows:

3. (1) For the purposes of this Act, "copyright" means the sole right to produce or reproduce the work or any substantial part thereof in any material form whatever, to perform, or in the case of a lecture to deliver, the work or any substantial part thereof in public; if the work is unpublished, to publish the work or any substan­tial part thereof; and includes the sole right

*(d) in the case of a literary, dramatic, or musical work, to make any record, perforated roll, cinematograph film, or other contrivance by means of which the work may be mechanically performed or delivered;

and to authorize any such acts as aforesaid.

Narrowly phrased in terms of the language of the section, the question is, did Compo by its action "make any record ... by means of which the work may be mechanically performed or deliv­ered"? That the detailed provisions of this statute should be interpreted in the context in which those detailed provisions are found and, so far as possi­ble, consistent with the many related portions of the statute, requires no citation of authority. Sec­tion 4 is related to the provisions of s. 3, particu­larly subs. (3) thereof which provides:

_____

*Subsections (a), (b), (c), (e) and (J) are not here in question and there is nothing contained therein of interpretative assistance.

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(3) Subject to subsection (4)*, copyright shall subsist for the term hereinafter mentioned in records, perforat­ed rolls, and other contrivances by means of which sounds may be mechanically reproduced, in like manner as if such contrivances were musical, literary or dramat­ic works.

Section 10, in establishing the term of the copyright in the record also provides in part that "the person who was the owner of such original plate at the time when such plate was made shall be deemed to be the author of such contrivance ...". Earlier in the same section, plate is referred to as "the original plate from which the contrivance was directly or indirectly derived ...", which, in the facts now before the Court, would include the master acetate from which ultimately was pro­duced the stamper used to stamp out the records. Furthermore, the word "plate" is defined in s. 2 as including "any stereotype or other plate, stone, block, mould, matrix, transfer, or negative used or intended to be used for printing or reproducing copies of any work, and any matrix or other appli­ance by which records, perforated rolls, or other contrivances for the acoustic representation of the work, are or are intended to be made;". (Underlin­ing added.)

Section 12(1) establishes that the author of a work shall be the first owner of the copyright in such work. Thus when ss. 10 and 12 are read together, the owner of the plate when made shall be deemed to be the author of the work in which copyright arising under s. 4(3) shall subsist, and which in our case is a record.

The infringement of the statutory right known as the copyright is described in s. 17(1) of the statute as follows:

17. (1) Copyright in a work shall be deemed to be infringed by any person who, without the consent of the owner of the copyright, does anything that, by this Act, only the owner of the copyright has the right to do.

The acts excluded from the definition of infringement, set out in subs. (2), are not relevant to these

_____

* The provisions of subs. (4) add nothing to subs. (3) for the purposes of this appeal. Subsection (3) was amended after the commencement of these proceedings by the addition of the opening words "Subject to subsection (4)". Thus subs. (3) brings into being another copyright, that is in the record itself, where a musical work in which copyright subsists under 3. is recorded.

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proceedings. The reference to rights created in the owner of the copyright includes, of course, the rights flowing from ss. 3 and 4(3).

With the advent of the commercial development of the phonograph and the consequent large-scale production of phonograph records, amendments to the international copyright treaties ensued and in due course found their way into the Copyright Act of the United Kingdom which for many years applied in this country, and ultimately were embodied in the first complete code of copyright law in Canada enacted in 1921 as The Canadian Copyright Act, 1921, S.C., c. 24. One of the changes initiated to meet the situation created by the advent of the phonograph record is found in the present s. 19 which provides in part as follows:

19. (1) It shall not be deemed to be an infringement of copyright in any musical, literary or dramatic work for any person to make within Canada records, perforated rolls, or other contrivances, by means of which sounds may be reproduced and by means of which the work may be mechanically performed, if such person proves

(a) that such contrivances have previously been made by, or with the consent or acquiescence of, the owner of the copyright in the work; and

(b) that he has given the prescribed notice of his intention to make the contrivances, and that there has been paid in the prescribed manner to, or for the benefit of, the owner of the copyright in the work royalties in respect of all such contrivances sold by him, as hereinafter mentioned.

(3) For the purposes of subsection (1), a musical, liter­ary or dramatic work shall not be deemed to include a contrivance by means of which sounds may be mechani­cally reproduced.

(5) The royalty mentioned in subsection (1) shall be two cents for each playing surface of each such record

_____

* Subsections (2), (4), (6), (8), (9) and (10) have been omitted as their terms add nothing to the issues arising in this appeal except for a few words of subs. (9) which are discussed later. Section 19 is of course not directly relevant in the disposition of this appeal because neither Canusa nor Compo availed themselves of its provisions by giving notice to the owners of the copyright and tendering fees. Section 19 is, however, of relevance in considering the reach and breadth of the grant of rights in ss. 3 and 4 as set out above.

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and two cents for each such perforated roll or other contrivance.

(7) When any such contrivances by means of which a literary, dramatic or musical work may be mechanically performed have been made, then for the purposes of this section, the owner of the copyright in the work shall, in relation to any person who makes the prescribed in­quiries, be deemed to have given his consent to the making of such contrivances if he fails to reply to such inquiries within the prescribed time.

Against this background of statutory provisions and the factual relationships between Canusa and Compo, the question to be resolved is simply whether Compo has infringed the rights of the plaintiff by its activities which resulted in the delivery of records to Canusa pursuant to the contract or arrangement between the parties. Bearing in mind the age of the legislation both here and in the United Kingdom, it is surprising to find that the issue so raised has not been before the courts in either country. There is, however, some jurisprudence in the United States Federal Courts to which I will make reference shortly.

Canusa was a defendant in the original action and was found by the trial judge to be an infringer. An appeal by Canusa was dismissed by the Federal Court of Appeal and its liability is not in issue in these proceedings. Compo was successful at trial and an appeal was taken by the plaintiffs against the dismissal of the claim against Compo by the Trial Division. This appeal the Court of Appeal allowed.

The learned trial judge appears to have exonerated Compo largely on the ground that Compo did not "sell" records and therefore did not come within s. 19(1)(b), and by reason of the further practical consideration that Compo would not know the royalties payable under s. 19 because Canusa alone had the accounting information from which to determine the net number of records sold to the public. This consideration was not dealt with by the Court of Appeal. The Court of Appeal took the view that while Canusa "caused" Compo to make the records and thereby infringed the respondents' copyright, Compo, without the permission of the respondents who had the

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sole right to make the contrivances (records) in question, "made" the records.

It is helpful in analyzing the relationship be­tween the record publisher and presser in the field of musical works to examine the parallel relationship between the printer and the publisher in the field of literary works. The Court of Appeal in England in Ash et al. v. Hutchinson & Co. (Pub­lishers), Ltd., et al.[1], considered the position of the printer who, under an arrangement with the pub­lisher, printed a copyright work. It was clear that the printer had no intention of infringing the copyright of the plaintiff/author and apparently relied upon the publisher to obtain any licences which might be necessary or, alternatively, to ascertain whether or not the work in question infringed a work in which copyright resided. The Court found that the printer and the publisher were in very different positions under the Copyright Act.

They [the printers] committed one separate tort of printing, apart altogether from the authorisation of printing by the publishers. The injuria which the plaintiffs suffered at their hands is different from the injuria at the hands of author and publishers, though the damnum might have been the same .. .

(Per Slesser L.J. at pp. 1500, 1501.)

Greene L.J. put it this way at pp. 1507, 1508:

Under the Copyright Act, 191 I, s. 1(2), the rights of the owner of copyright are set out. A number of acts are specified, the sole right to do which is conferred on the owner of the copyright. The right to do each of these acts is, in my judgment, a separate statutory right, and anyone who without the consent of the owner of the copyright does any of these acts commits a tort; if he does two of them, he commits two torts, and so on. Now at the end of the list of acts there is added the words (which must be prefaced by the words "the sole right"): "To authorise any such acts as aforesaid." The statute in terms treats the right to authorise as a separate right, different from the other rights specifically enumerated. It is not, in my humble judgment, correct to say that the words "to authorise any such acts as aforesaid" are mere surplusage. A person may no doubt reproduce a work himself or through an agent, and the word "reproduce" would cover such a case. But he cannot, I think, be said to reproduce a work if he has merely

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authorised someone else to reproduce it. Similarly, in the case of a dramatic work, an author may be said to "perform" his work if he engages the company of actors who perform it; if he merely licensed a performance he could not be said to perform the work. These consider­ations made it essential that the legislature should confer the right to authorise as a separate and substan­tive right, and they are of particular importance when it is remembered that infringement is defined not by an independent catalogue of acts which are to amount to infringement but by reference to the rights conferred on the owner of the copyright.

It is interesting to note that the Court of Appeal, in disposing of this and related actions in connec­tion with the same works found that the publisher and the infringing author were joint tort feasors in the tort of authorising the printing whereas the publisher and the printer were found to have com­mitted separate torts.

In the earlier case of Baschet v. London Illus­trated Standard Company[2], the plaintiff held the copyright under French law in certain photographs which were printed, published and circulated in the London Illustrated Standard without his consent. The plaintiff brought an action against the publishers and the printers. In the course of his judgment Kekewich J. stated, with reference to a similar but differently worded statute:

The main question is as to the penalties. The plaintiff admits that he cannot sue the distributors, because they do not come within the first branch of s. 6 of the Fine Arts Copyright Act, 1862, but within the second branch, which is prefaced by the words, "knowing that any such repetition, copy, or other imitation has been unlawfully made," and as the plaintiff cannot prove knowledge against them, he cannot sue them for penalties under that section. He contends, however, that he can sue the publishers and the printers, and, subject to the question of law to which I will refer presently, it is not denied that the publishers are liable to him for penalties. But it is denied that the printers are so liable. It is urged that, being only employed by the publishers, and printing for them because they do not do their own printing, they are not liable under the section. But the words of the section will not bear that construction. It imposes a penalty on any person who, not being the proprietor for the time

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being of copyright in any painting, &c., "shall without the consent of such proprietor repeat, copy, &c., or cause or procure to be repeated, copied, &c., any such work or the design thereof." The printers have repeated, copied, &c., and fall exactly within the words of the section. It is argued, however, that the section points to two alternative classes of persons, namely those who "repeat, copy &c.," and those who "cause or procure to be repeated, copied, &c.," and that the publishers fall within the latter alternative. They would be liable if they printed themselves, and the section makes liable for causing others to print. It is contended that the employees cannot be liable as well as their employers for the same offence. But I ought not to struggle to get out of the words of the section. The Legislature makes no distinction in this branch of the section between those who know and those who are ignorant that they are doing wrong, and the printers, being within the words of the section, cannot escape on the plea of innocent agency. (at pp. 76, 77)

It is difficult to find any factual or commercial difference between the printer of a literary work such as the book in question in Ash and a record presser. Each produces a "work" in a "material form" in which copyright resides; the former pro­ducing in printed form a literary work, and the latter producing in material form a contrivance which by s. 4(3) is, in this case, deemed to be a "musical work". The comparison is no less valid because of the complication that in the case of the record, there is another "musical work" embodied therein which may be performed by "acoustic representation" in the words of s. 2. Neither does the fact that s. 4 was amended in 1972 by Statutes of Canada 1970-71-72, c. 60, s. 1, by the addition of subs. 4 to s. 4 which removed the right in the owner of the copyright in the contrivance to restrict public performance of the embodied musi­cal works by means thereof, deflect from parallel form the relationship of the printer and the presser to the copyright work in question.

The United States Copyright Act, both in its present and earlier forms, has, of course, many similarities to the Canadian Act, as well as to the

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pre-existing Imperial Copyright Act. However, United States court decisions, even where the fac­tual situations are similar, must be scrutinized very carefully because of some fundamental differ­ences in copyright concepts which have been adopted in the legislation of that country. The United States statutes have not been based upon the international copyright treaties of the 19th and 20th centuries, being the Berne Convention of 1886 and the Rome Copyright Convention of 1928, as the United States of America did not become signatories thereto. Indeed it was not until the adoption by that country in 1955 of the Uni­versal Copyright Convention of 1952 that the United States participated in the field of interna­tional copyright law other than by a collection of bilateral agreements. Furthermore, the wording of the definition of copyright in the current United States statute (The Copyright Act, 17 U.S.C.) is significantly different from the precise definition of copyright in s. 3 of the Canadian statute. Corre­sponding to the key words, "the sole right ... to make any record" in s. 3 of the Canadian Act are the words "unauthorised manufacture" of records in s. 101(e) of the American Act, which may, in some circumstances, amount to the same meaning, but in other situations might well import a differ­ent meaning and produce a different result. That is not to say that we may not find some assistance in examining the experience in the United States and for that purpose, I turn briefly to some of the decisions of the United States Federal Courts. In G. Ricordi & Co., Inc. v. Columbia Graphophone Co.[3], a company in the record business caused to be produced a record of a song the copyright in which was held by the plaintiff, and every step from the musical performance which was recorded, down to but not including the pressing of the record, was carried out by the defendant in the United States. The actual pressing of the record was done by the defendant or its agents in Canada. The Court found that the "manufacture" of the record commenced with the musical performance and continued through nine separate steps, the ninth being the pressing process conducted in Canada. The Court concluded that "the various steps taken to produce the product (a copper stamper)

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which was shipped to Canada were all essen­tial to the manufacture of the records which were finally finished and sold in Canada", and that therefore the record was manufactured in the United States. This result was reached presumably on the reasoning that any step "essential to the manufacture" amounted to manufacturing and hence infringement.

The same District Court, years later, was faced in Edward B. Marks Music Corporation v. Foullon[4] with the question as to who was the manufacturer for the purposes of determining copyright infringement. The owner of the copyright sued both the company who organized the production of the record and the record presser, the former being in a position analogous to Canusa and the latter to Compo. None of the intermediate contributories such as the artists, the electroplat­ing plant, and the recording studio were joined in the action. The Court found that the defendant, who generally performed the role which Canusa performed in these proceedings, was "the general manufacturer", and the defendant presser was "the last instrumentality in a chain of production", but no liability was found in the record presser, presumably on the basis that, following Ricordi, the general manufacturer alone "manufactures" the work for the purpose of the Copyright Act. This judgment was confirmed by the Circuit Court of Appeal[5] where Circuit Judge Learned Hand, with reference to the liability of the person who pressed the offending records, found no liability for infringement because the owner of the copyright had licensed the 'general manufacturer' by contract to which the pressing company was not a party. Unlike the position in this appeal, the copyright owner had licensed the 'manufacture' of the records and such approval carried with it the actions of the subcontractor, the record presser. Similar issues arose in the United States Court of Appeals, Second Circuit, in Reeve Music Co., Inc., and Robbins Music Corporation v. Crest Records, Inc. and Shelley Products Ltd.[6] where the distinc­tion between persons engaged in the different

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stages in the production, to use a neutral word, of a record was avoided by a finding by the court that the defendant producing the master was acting in concert with the person who derived therefrom the stamper and pressed the records. By inference, although not expressly, the Court found that the production of the master, the stamper, and the records amounted to manufacture within the meaning of the word as used in the United States statute. Presumably, the Court was relying on Ricordi in finding that the process of manufactur­ing a record did not necessarily include the pro­duction of the record in the final form, but that it was sufficient for the defendant to be engaged in one or more of the essential elements of the act of manufacturing the record in the sense of the Ricordi judgment. In the Reeve case, the entrepreneur was a Canadian corporation not a party to the action who by subcontracts with the United States defendants established the sequence of activities which produced in the end the record for market. The combined efforts of two subcontrac­tors amounted to the "manufacture" of the record, and hence both were liable as "joint tort feasors". A Federal District Court in the same circuit found in Pickwick Music Corporation, et al. v. Record Productions, Inc.[7], that the act of pressing the record alone was an infringement of the copyright of the owner in the musical work embodied in the record. Again the record was brought into being by a combination of activities wherein one group of defendants organized the project and another group actually pressed the records. The Court found that both groups were manufacturers of the record and that the persons doing the actual press­ing as subcontractors were entitled to a claim over against their fellow defendants for failure to obtain the necessary consents or statutory licences, but that ignorance by the parties pressing the records of the failure by the entrepreneurial group to obtain copyright licenses and the fact they were never paid for the pressing, were not defences in law. It is difficult to determine whether liability was found in the presser on the simple ground that the pressing of the record is the manufacturing of the record, or whether liability springs from the concept of joint tort feasors. MacMahon D.J. in his judgment states in part:

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Participation in the tort of copyright infringement makes each participant jointly and severally liable. (at p. 40)

In the final disposition of all claims, therefore, the Court found that all the defendants "participated in the arrangements for the pressing of the album", and judgment went against not only the pressing company but also those who made their contribution earlier in the chain of production. It follows that the Court concluded either that there can be more than one manufacturer of a single record, or that all contributories to the manufac­ture of the record are joint tort feasors in the violation of the copyright brought about by the manufacture of the record by whichever of the actors is the manufacturer,

The most recent decision directly relating to the problem at hand also comes from the United States District Court for the Southern District of New York, Leo Feist, Inc. et al. v. Apollo Records et al.[8] For reasons not revealed in the report of the case, the plaintiffs did not join the record presser as a defendant but rather sued the entrepreneur who "conceived, planned, executed and sold the offending recordings" and who in the course of proceedings, admitted that it was "the manufac­turer" of the record in question. The Court refers to the defendant entrepreneur as the "general manufacturer" and found that because the general manufacturer did not act jointly or in concert with the subcontractors, the latter were not guilty of infringement of the plaintiff's copyright. Indeed, the Court, in construing the term "manufacturer" as it appears in s. 101(e) of the United States Copyright Act, equated it with the term "general contractor" from the construction world. Anyone performing a lesser function did not appear to qualify as an infringer. For example, the subcon­tractor who recorded the musical work and mixed the sounds, presumably in making the tape record­ing used by it to thereafter produce the master mould or matrix, was not an infringer. Judgment

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was confirmed without comment in the Circuit Court of Appeals[9].

The Feist case illustrates the tendency to associ­ate the word "manufacture" with large-scale pro­duction, usually in the sense of combining compo­nents or subassemblies into an assembled or finished product. It is this sense or meaning that the Court brought to the word manufacture in the Feist case when it found the central entrepreneur to be the infringer and discharged the subcontrac­tor or artisan who produced the tools at intermedi­ate stages of the process but did not produce the finished product which the manufacturer was responsible for marketing. The ultimate step in creating the record was taken by the record presser who was not joined in the action and whose contri­bution was not the subject of any comment in the judgment. As in the Marks judgment mentioned earlier, the Court observed that "All persons con­cerned in the infringement of a copyright are jointly and severally liable as joint tort feasors", except that in referring to the Marks case, the Court in Feist appears to back away from the concept that any element of "manufacture" neces­sarily makes the participant in that element an infringer.

The words 'manufacturing' and 'manufactured' have come before the courts in this country in connection with proceedings under the Income Tax Act and the Excise Tax Act. In Columbia Records of Canada Ltd. v. M.N. R.[10] Gibson J. of the Federal Court of Canada found that a com­pany by contracting out the preparation of tapes, masters, mothers, and stampers, and by contract­ing with a record stamper for the actual stamping of records, was not "a manufacturing and process­ing corporation" under the then s. 40A of the Income Tax Act. Substantially, the appellant tax-payer performed, in the development of market-able records, the role of Canusa in these proceedings. The actual work of producing stamps and of stamping out the records was performed by a person in the same position as that of Compo in this appeal. The Court found that the records were

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"processed or manufactured" by the latter (that is Compo, here) because to be the manufacturer, that person "must physically process or manufac­ture" the goods (at p. 5491). The term 'manufac­ture' is also considered in a line of authorities under the Excise Tax Act of Canada but by reason of the statutory plan there in effect shed no light on the problems arising under s. 3 of the Copyright Act. Vide Her Majesty The Queen v. Canadian Pacific Railway Company[11], and Rexair of Canada Limited v. The Queen[12].

Whether or not the work contributed by Compo, being the preparation of the stamping device and the stamping of the records, comes within the sole rights reserved by s. 3(1) of the Act to the owner of the copyright, turns, as observed at the outset, upon the proper interpretation of the words:

the sole right to produce or reproduce the work ... in any material form whatever ... and includes the sole right

(d) in the case of a ... musical work to make any record , .. by means of which the work may be mechanically performed or delivered .. .

together with the words in s. 4(3), which provide that copyright subsists in "records ... by means of which sounds may be mechanically reproduced…"

Courts in this technical field of copyright have found it prudent to make their judicial answers congruent with the legal issues raised in the pro­ceeding at hand leaving, so far as possible, analo­gies, examples and hypothetical questions to another day. I propose to follow this principle and therefore expressly refrain from deciding such questions as whether or not there may be, in law two "makers" of a single record for the purpose of these sections of the Copyright Act. Mr. Hughes for the respondent in answer to a question from the Bench put it very well when he said that copyright law is neither tort law nor property law in classifi­cation, but is statutory law. It neither cuts across

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existing rights in property or conduct nor falls between rights and obligations heretofore existing in the common law. Copyright legislation simply creates rights and obligations upon the terms and in the circumstances set out in the statute. This creature of statute has been known to the law of England at least since the days of Queen Anne when the first copyright statute was passed. It does not assist the interpretive analysis to import tort concepts. The legislation speaks for itself and the actions of the appellant must be measured accord­ing to the terms of the statute.

The Chief Justice of the Federal Court of Appeal, in finding liability in Compo, observed with reference to Canusa:

It is true that Canusa, which defendant started at an earlier stage in the course of events and arranged with the respondent to make the records, was also an infring­er of the appellants' right because it caused the respond­ent to make the records;

As pointed out in the Ash case, supra, the act of authorizing and the act of making are separate tort and the courts have held, both in the United Kingdom and the United States, that persons com­mitting these separate torts are not of course joint tort feasors. Thus Canusa may be an infringer either by reason of its authorization of the actions of Compo, or perhaps because it may be found (but 1 do not find it necessary to so decide here) that Canusa "made" the offending records. The judgment then continued:

however, the immediate tort feasor is not exonerated from liability by reason of the liability of the vicarious tort feasor.

I take this to be a reference back to the distinction made earlier in the judgment between the infringement by authorization committed by Canusa, and the infringement by the making of the records committed by Compo. However, these are separate and distinct violations of the statute and hence separate and distinct infringements rendering each wrongdoer liable to the holder of the copyright without reference to the actions and responsibili­ties of the other wrongdoer.

There is a clear grant in s. 3(1)(d) of the exclusive right "to make" a record so that a musical

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work may be mechanically performed therefrom. There is an equally clear grant in s. 3 of the exclusive right to authorise the making of such a record. The respondents are acknowledged by the other parties to these proceedings to hold such exclusive rights in the musical work in question. This may be so by reason of assignment from the 'author' of the work in question who is by s. 12(1) the first owner of the copyright. We are not con­cerned with the origin of the respondents' rights in the work as neither their existence nor title is challenged. There is another right which at first blush may be of concern, that is the copyright arising in the record itself under s. 4(3) upon the production of the record, and which copyright is separate and distinct from the copyright in the musical work recorded or embodied in the record. The owner of the original plate or matrix is deemed by s. 10 to be the author of such contriv­ance. By s. 12(1), such author is deemed to be the first owner of the copyright therein, that is to say of the copyright established by s. 4(3) in the record itself.

Thus Canusa, by making or causing a third party to make the matrix from which the stamper and thereafter the records were made, might, if authorized by the owner of the recorded musical work, be the owner of the copyright in the record. However, the recording of the work was not autho­rised. Compo, of course, as the agency which, using the master acetate (which I take to be in these circumstances the plate or matrix described in ss. 10 and 2 of the Act) actually stamped out the records, would in law have obtained no copyright in the record whether or not the owner of the copyright in the musical work had granted a licence to record that work. The ownership of the copyright in the record would, had the recording been authorised, reside in the owner of the matrix at the time of its making, here Canusa.

The fact that Compo did not and could not obtain copyright in the record is in no way deter­minative of the question, "Has Compo infringed the rights of the respondents?" The examination of the workings of s. 19 is digressive from this issue. No unauthorized exercise of the owner's mechanical

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rights in a work can produce in the wrongdoer a copyright in the resultant record. The simple question is, did Compo, by taking the master acetate from Canusa and making therefrom the moulds and stampers, infringe the copyright in the musical work of the respondents by thereafter "making records" within the meaning of s. 3 and s. 17 of the Act?

Some assistance can be obtained from other provisions in the statute. By s. 17(4), knowledge on the part of the alleged infringer is required in order to establish infringement where the alleged infringement consists of 'selling, distributing, importing or exhibiting in public' a work. 'Making' of records is not included in the list of actions with respect to which knowledge on the part of the alleged infringer is a prerequisite to infringement. Section 25 establishes as an offence the act of making for sale any infringing copy of a work in which copyright subsists. Again the condition of "knowingly" must be established before the offence is completed. Sections 3 and 17(1), however, admit of no prerequisite of knowledge of the existence of the violated copyright or that the action in question amounts to infringement. Infringement is the single act of doing something which "only the owner of the copyright has the right to do".

I return to the concept in Ash, supra. The printer, without intent to infringe or indeed aware­ness of the consequences of his actions in printing the material supplied by the publisher, was found to have infringed the rights of the author of a work, the existence of which was unknown to the printer. Whether as in Pickwick, supra, the printer was ever paid for a contribution to the infringing process is irrelevant. It may be argued that the record presser, unlike the printer, cannot, without knowledge of the existence of the infringed rights, be guilty of infringement because the presser is not creating a "copy" of the existing copyright work as does the printer, but rather the presser creates a new work in which a new and separate copyright resides independent of the copyright in the recorded musical work. This distinction is correct but creates no difference in law. The offending printer

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infringed upon the protected literary work of the author by making copies of it. The offending press­er infringes the protected musical work of the author by making a contrivance "by means of which the [musical] work can be performed". The sole right to perform the work resides in the owner of the copyright therein (s. 3(1)), The sole right to make such contrivance is in the copyright owner (s. 3(1)(d)). The sole right to authorize either performance or the making of the record is in the copyright holder (s. 3(1)). Sections 3 and 19(9)(c) very clearly establish these rights as separate and distinct rights, exclusive to the owner of the copyright in the work. Compo, wittingly or unwittingly, breached this right exclusively held by the respondents. Compo may have redress against Canusa, the publisher' by analogy, but here such a right may be of little or no economic value. Compo and others in like position may protect themselves by contract or by examining the copyright register and by other searches so as to determine the identity of the holder of the right to grant mechanical licences in respect of the musical work in question. It may be that s. 19 would afford another protective shield, but this would likewise require a contractual arrangement with the record producer or marketer, and in the realities of com­merce, the application of this section is limited to the situation where the presser is the maker of the matrix or master from which the records were "directly or indirectly derived" as provided in s. 10 because it is the cutter who acquires the desired copyright in the record ultimately produced. I add these comments to show that a plain and literal application of the statute does not produce the hardship that might at first glance be thought to arise in persons in the position of Compo in the record business. Indeed, the exhibits include a contract form employed by Compo's pressing, divi­sion wherein the other contracting party guaran­tees that all applicable copyright fees have been paid.

The Canadian statute employs the simple verb "make" with reference to the exclusive right in the copyright holder to produce records. The United States statute uses the word "manufacture" as do the Canadian taxing statutes referred to earlier. With reference to those statutes, the courts have

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concluded that a presser or person performing a like function, that is physically producing the end product, the record, was 'manufacturing' the record. In modern usage the word 'manufacture' connotes a large-scale production of the article and/or the production of the article by combining the efforts or creations of two or more contributors by subcontract or otherwise. Thus the components might be made by several different persons and the final product might be assembled or produced for marketing by the manufacturer. Such a person might also be referred to as the 'maker' because the meaning of 'making' and 'manufacturing' overlaps in modern language. The difference is that manufacturing is a broader term and might be applied to a person who physically or actually makes, fabricates or assembles nothing, but who, as the 'general contractor' is the coordinator of all the contributing makers of components or sub-assemblies. It is therefore easier to conclude that a record presser has made the records than that he has manufactured them, but clearly in modern terminology both words apply to the actions taken by the presser in producing the complete ready-to-use end product. In Ricordi, supra the term manufacture appears to include any essential clement in manufacturing. In Pickwick, supra, and Columbia Records, supra, the actual presser of the records were found to be manufacturers.

The term "manufacture" as used in the lan­guage today no doubt includes the word "make"; and the converse is likewise doubtless true in modern usage, but it does not follow that "manufacture" and "make" invariably have the same meaning. For example, in the Shorter Oxford English Dictionary, the term "manufacture" is defined as:

The making of articles of material (now, on a large scale) by physical labour or mechanical power ... A branch of productive industry.

The same dictionary indicates that in earlier times, the word had a connotation of "working with the

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hands; a manual occupation, handicraft", perhaps by reason of the Latin root, manu facere, which refers to making by hand. On the other hand, this dictionary assigns the following meaning to the verb "to make":

To produce by combination of parts, or by giving a certain form to a portion of matter; to construct, fash­ion, bring into existence.

The word "make" is defined in the Random House Dictionary as:

1. to bring into existence by shaping or changing material, combining parts, etc.; ..

2. to produce; cause to exist; bring about:

Reference is then made by way of contrast perhaps to the term "manufacture" as follows:

Manufacture usually refers to producing something from material that requires conversion from one state or condition to another, now almost entirely by means of machinery in a relatively complex process: to manufac­ture automobiles by the assembly of different parts.

In Webster's New International Dictionary (2nd ed.) "make" is defined as follows:

to form or fashion physically;

In the context of s. 3 of the Copyright Act the verb "to make" includes the direct sense of physi­cally causing the record to come into being. It may also include the general activity of bringing about the production of the record and the indirect actions associated therewith, but that phase of the meaning of the word is not, in these proceedings, directly applicable. In my view, the person who by means of stampers, dies or other devices and procedures, forms plastics and other materials into discs, and imprints thereon grooves and tracks "by means of which the work may be mechanically performed", has thereby within the meaning of s. 3(1)(d) made a record.

There may be persons involved in one or more stages in the production chain leading to the crea­tion of the record as the end product who have, in the sense of s. 3, thereby 'made a record'. Con­versely, there may be persons who, through a coordinating role analogous to that of a general contractor, will be deemed in some circumstances

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to have made the record even though they may not have physically themselves brought into being either the record or any material, intermediate tool, or piece of equipment in the production of the record. None of these questions need on this appeal be determined. Sufficient it be to determine, as I have done, that Compo did indeed make the record in breach of the respondents' sole right as the owners of the copyright, so to do. I therefore would dismiss the appeal with costs.

Appeal dismissed with costs.

Solicitors for the appellant: Hayhurst, Dale & Deeth, Toronto.

Solicitor for the respondents: Donald F. Sim, Toronto.