• Rules of Procedural Fairness Breached by Refusal to Allow Netflix to be Heard on New Provisions in Tariff
  • January 18, 2016 | Authors: Adrian J. Howard; Beverley Moore; Chantal Saunders
  • Law Firm: Borden Ladner Gervais LLP - Ottawa Office
  • Netflix, Inc. v. Society of Composers, Authors and Music Publishers of Canada, 2015 FCA 289

    This was an application for judicial review of a decision by the Copyright Board (the "Board") of a tariff of royalties for audiovisual webcasts (the "Tariff") for 2007 to 2013. Netflix's challenge related specifically to the establishment of a monthly minimum fee for free trials of subscription services. The Court of Appeal found that the process by which the Board certified the Tariff was not procedurally fair and allowed the application on this basis.

    The Society of Composers, Authors and Music Publishers of Canada ("SOCAN") filed annual statements of the royalties that it proposed to collect for audiovisual works from 2007 to 2013, and in 2011, the Board indicated that it would consider certifying the Tariff. There were Objectors to the proposed Tariff, which did not include Netflix. A Settlement was reached between SOCAN and the Objectors. As part of this Settlement, the Tariff was amended to include, among other things, a minimum monthly fee for free trials. The Court of Appeal noted that none of the Objectors offer subscriptions and therefore free trials.

    Netflix took a number of steps to address the minimum monthly fees for free trials, and ultimately brought this application. The Court of Appeal held that Netflix had the right to be heard with respect to these royalties even though it was not involved in the initial process. In particular, the Court of Appeal found that "[a]lthough Netflix itself did not have this right, the industry affected by the provision at issue enjoyed that right and therefore should have the opportunity to be heard and put its case forward." The Court of Appeal considered that the interests of an industry are a relevant factor to be taken into consideration in determining whether there has been a breach of the duty of procedural fairness. The Court of Appeal also noted section 67.1 of the Copyright Act, and the right for affected parties to be heard, which cannot be denied when a certified tariff includes subject matter that was not publicly advertised. The Court of Appeal also reviewed the framework in the Board's decision in Re:Sound 5.

    The Court of Appeal set aside the Board's decision with respect to royalties on free trials and returned the matter to a different panel of the Board for redetermination.