Legislative History

The Society of Composers, Authors and Music Publishers of Canada ("SOCAN") would negotiate with individual game publishers (collectively represented by the Appellant, the Entertainment Software Association ("ESA")) for rights to use SOCAN members' musical works in the games. Traditionally, these games would be distributed on physical media such as CDs. SOCAN sought a tariff from the Copyright Board on digital copies of games sold online, on the basis that it had given no permission in respect of its rights under s. 3(1)(f) of the Copyright Act:

(f) [Copyright includes the sole right,] in the case of any literary, dramatic, musical or artistic work, to communicate the work to the public by telecommunication... .

The Court granted the ESA's appeal and quashed the tariff on the basis that s. 3(1)(f) applies only to performances, not to reproductions. Because a digital download is meant to create a permanent copy on the users' machines, it is a reproduction rather than a performance.

Paragraph 3(1)(f) originally read:

(f) In case of any literary, dramatic, musical or artistic work, to communicate such work by radio communication.

SOCAN unsuccessfully argued that the expansion of s. 3(1)(f) to "telecommunication" demonstrates Parliament's intention to expand the communication right to technologies that involve transmitting data in a way that gives the end user a permanent copy of the work. The amendment was part of the 1988 Canada-United States Free Trade Agreement Implementation Act. Before CUFTA, Canadian courts had found that "radio communications" covered Hertzian radio waves but not communication by co-axial cables. Under CUFTA, Canada was obligated to extend Copyright to transmission by co-axial cable as well.

Paris J. found that "logging operations" refers to "ongoing activities that are carried on by a taxpayer" (para. 50), and therefore the taxpayer could not claim federal logging tax credits in respect of any kind of capital disposition, pursuant to Regulation 700(1)(d)(i) (in this case, principally two BC saw mills.)

As an intervenor, British Columbia argued that the legislative history of Regulation 700 shows that extending the logging tax credits to capital gains would be more consistent with Parliament's intentions. The wording of s. 700(1)(d)(i) was not materially changed since its enactment in September 26, 1963, which predates the introduction of the capital gains tax in 1972. Parliament's apparent intention was to provide relief to forestry businesses from provincial forestry taxes, and taxpayers such as the appellant were made to pay taxes on their capital gains under the BC Logging Tax Act. Therefore, the intervenor argued, when Canada's income tax base was expanded to include a portion of capital gains, it must also have been Parliament's intention to expand its relief of taxes derived from that tax base, such as the logging tax.

Paris J. disagreed. Regulation 700(1) sets out a detailed definition of "income from logging operations," which shows a clear intention to limit the meaning of the term, not to allow it to expand. Moreover, as Paris J. had already concluded, logging operations could not reasonably encompass capital gains - he stated (at para. 91) that "it cannot be said that with the advent of capital gains tax Parliament was taxing a 'new area of logging income.'" Finally, the fact that capital gains were not taxed until long after the enactment of Regulation 700 meant that Parliament could not possible have intended at the time to provide relief for tax on capital gains, except insofar as they could reasonably be characterized as income from logging operations (i.e. not at all).