Court rejected the argument that the claim related to provincial law of contract, not copyright
The Federal Court has upheld its jurisdiction over a dispute concerning unpaid royalties.
In Society of Composers, Authors and Music Publishers of Canada v. Vidéotron Ltée, 2023 FC 1385, Quebecor and Videotron moved to strike the claim of the Society of Composers, Authors and Music Publishers of Canada (SOCAN) or to stay the action in favour of proceedings in the Superior Court of Quebec.
Quebecor argued that it was plain and obvious that the Federal Court did not have jurisdiction over the proceeding or that its jurisdiction was sufficiently uncertain that the matter should proceed in the Superior Court.
SOCAN is a collective society authorized under the Copyright Act to collect and distribute to its members royalties for the use of certain rights in its repertoire of musical works. SOCAN holds the exclusive right to authorize the use of performance and communication rights in Canada.
Some of the royalties SOCAN collects are paid pursuant to tariffs approved by the Copyright Board. Under the Copyright Act, collective societies may file a proposed tariff to establish royalties concerning the rights it administers. If the tariff is approved, the collective society may collect the royalties specified in the tariff and, if they are not paid, recover them in a court of competent jurisdiction. Furthermore, the Copyright Act allows collective societies like SOCAN to enter agreements to establish royalties.
SOCAN’s claim in the Federal Court arose from a dispute over royalties payable for Quebecor’s use of works in SOCAN’s repertoire in 2018. Quebecor admitted that it owed royalties for the use. However, Quebecor claimed that at the end of 2018, it deducted from its royalty payment amounts that were allegedly overpaid from 2014 to 2018.
Quebecor’s position concerning the overpayment stemmed from a 2018 agreement among SOCAN, Quebecor and other broadcast distribution undertakings (BDU), addressing certain obligations regarding copyright tariffs.
SOCAN agreed there was an overpayment beginning in April 2018, but it disputed that there was an overpayment in 2014 to March 2018. SOCAN also challenged Quebecor’s unilateral decision to set off any overpayment against amounts owing in 2018.
Quebecor filed a proceeding in the Superior Court of Quebec, seeking a declaration that SOCAN’s claim was time-barred or that the 2018 agreement did not prevent Quebecor from setting off the asserted overpayment against other amounts due to SOCAN.
Quebecor challenged the Federal Court’s jurisdiction over the case, arguing that the only disputed issues pertain to the interpretation of the 2018 agreement. Quebecor characterized the matter as a claim in breach of contract that raised issues related to the doctrine of equitable set-off. It argued that the source of SOCAN’s claim arose primarily from the 2018 agreement, while Quebecor’s claimed set-off amount arose exclusively from the 2018 agreement. Quebecor asserted that it was plain and obvious that the essential character of SOCAN’s claim related to provincial law of contract and set-off, not copyright.
The Federal Court explained that to strike a claim for lack of jurisdiction, it must be “plain and obvious” that the federal court lacks jurisdiction. It ultimately ruled that it was not plain and obvious it had no jurisdiction over SOCAN’s claim.
The court found that SOCAN’s claim sought to recover money payable as royalties for using copyright works. It asserted a right to collect such royalties on behalf of copyright owners as a collective society under the Copyright Act.
The court acknowledged that many of the requisite elements of SOCAN’s claim may be conceded by Quebecor, and the determination of the claim may require the interpretation of a contract. However, the court said it was not plain and obvious that this changed the essential nature or character of the claim or otherwise took it outside the jurisdiction conferred on the Federal Court by the Copyright Act.
The court further explained that federal courts may be called upon to interpret agreements in exercising their jurisdiction in areas of federal competence, including intellectual property. The court said that it was not plain and obvious that Québecor’s admissions and defences referring to the 2018 Agreement changed the essential nature of the case from a copyright enforcement case to a contract case.
Quebecor also argued that there was at least uncertainty regarding the court’s jurisdiction, such that the interests of justice favour having the matter proceed in the Superior Court of Quebec.
However, the court said there was insufficient uncertainty concerning the court’s jurisdiction and inadequate evidence of prejudice to Quebecor to justify staying the proceeding in the Federal Court, the forum chosen by SOCAN, in favour of the Superior Court. Accordingly, the court dismissed Quebecor’s motion.
