(CN) - Four of Canada's biggest media conglomerates claim in court that the Society of Composers, Authors and Music Publishers of Canada wrongfully collected $15 million in license fees for cell-phone ringtones.
Rogers Communications, Telus Communications, Bell Mobility and Quebecor Media claim in the Federal Court of Canada that SOCAN collected tariff fees on ringtones since the Copyright Board of Canada approved the tariff in 2006.
The approval was retroactive to 2003 and was later approved until 2013, according to the complaint.
Over plaintiffs' objections, the board approved the fees by determining "that by transmitting ringtone downloads containing a substantial portion of a musical work in the defendant's repertoire, the plaintiff were engaged in the communication of those musical works to the public by telecommunication" as defined in Canada's Copyright Act.
In July, however, the Supreme Court of Canada issued two decisions "that had the secondary effect of overturning" the ringtone tariff, according to the complaint.
The rulings effectively voided the tariffs after the Entertainment Software Association and Rogers Communications, in separate actions, sued SOCAN over fees for musical works in video games which users could download, and in the Rogers case, musical works available for downloading and on-demand streaming.
"The Supreme Court found that the act of communicating a work to the public by telecommunications is an example of the public performance of the work, and not the reproduction of the work," the complaint states. "The Court found further that downloading is an act of reproduction, and therefore could not also be a public performance, since the Copyright Act does not allow for the layering of rights in this manner."
SOCAN acknowledged in written submissions that the two decisions "would also apply to ringtone downloads," according to the complaint.
The plaintiff companies seek a declaration "that the download of a ringtone over the Internet or similar network is not a communication of a musical work to the public by telecommunication, and does not therefore infringe" on Canada's Copyright Act.
The plaintiffs are represented by Gerard Kerr-Wilson, with Fasken, Martineau DuMoulin, of Ottawa, Ontario.
In a separate complaint, also in Ottawa Federal Court, SOCAN sued cable giant Shaw Media, claiming Shaw owes it royalties for music played on the company's "pay, specialty and other television services."
SOCAN claims that a 2009 audit of the National Geographic Channel, "one of defendant's programming undertakings," revealed that the channel "and likely all the other programming undertakings in the defendant's control, had under-reported the amount of its gross income and, as a result, underpaid the licence fees due and payable to SOCAN from at least as early as January 1, 2005."
The audit, according to the complaint, found that the National Geographic channel made improper deductions from advertising revenue and didn't include the fair market value of "contra goods and services" in the gross income reported to SOCAN. The defendant, after being notified, claimed the right to exclude the revenue from its gross income and has "refused" to pay fees owed to SOCAN "based on its full gross income."
SOCAN is represented by D. Lynne Watt with Gowling Lafleur Henderson, in Ottawa.
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