Supreme Court of Canada, Society of Composers, Authors and Music Publishers of Canada (SOCAN) v Canadian Assn. of Internet Providers (CAIP), 2004 SCC 45

(1) Also known as the Tariff 22 case, this is the leading decision on ISP liability and copyright infringement. The Court denied the claimants royalties for copyrighted materials that were transferred on the Internet. It interpreted section 2.4(1)(b) of the Copyright Act (the “common carrier exception”) and found that ISPs are not liable as long as they are “conduit” for information (para 32). That is, if an intermediary remains content neutral, they are considered not to have communicated the content at all (para 111). For this reason, intermediaries are also immune from defamation liability (para 89). Whether an intermediary is regarded a conduit for information and thus qualifying for immunity under this section will primarily depend on its function.

(2) To successfully use the “innocent disseminator” defence in a defamation action, an intermediary must show that it a) did not know about the publication of the libel; b) did not have any reason to suspect its presence (e.g., by receiving a notice); and c) was not negligent in detecting it.

(3) For the purpose of s. 2.4(1)(b), “necessary” means of telecommunication is a means that is “reasonably useful and proper” to achieve the benefits of enhanced economy and efficiency’’ and “of greater or lesser benefit or convenience” (para 91). Previously, the Federal Court of Appeal found that a means is “necessary” only if “communication in that medium of telecommunication would not be practicable or, in all probability, would not have occurred’’ without it (para 113). However, the Supreme Court rejected this high threshold due to the chilling effects it might have on ISPs’ efforts to expand their operations and develop more efficient means of telecommunication.

(4) The “means” of telecommunication was held not to be limited to routers and hardware. Rather, it includes all “software connection equipment, connectivity services, hosting and other facilities and services without which such communications would not occur” (para 92). Therefore, this section protects the providers of these means of telecommunication as well.

(5) The protection offered by section 2.4(1)(b) also extends to caching and hosting activities. Caching technology was found to be content neutral. Applying the new threshold, caches were found to be a necessary means of telecommunication since they were developed for the very purpose of enabling a more economical way of transmitting large files.  With regards to hosting, ISPs are generally not liable for copyright infringement by contents stored on their servers because the user, and not the intermediary, is deemed to be the content provider. Given the large amount of data being transmitted through the Internet, the Supreme Court noted that it would not be feasible for intermediaries to detect all the material that infringes copyright. However, where an ISP has knowledge of copyrighted content but fails to take remedial steps (para 124), liability may ensue since a failure to respond may constitute authorizing the infringement. 

(6) Further, the Court confirmed the findings in CCH Canadian v LSUC (see below) that liability for authorizing copyright infringement will only follow if ISPs “give approval to; sanction, permit; favour, or encourage” the infringing conduct (para 127). That is, simply knowing that a neutral technology, such as hosting, might be used to violate copyright laws is not sufficient to support a finding of authorization. 

(7) Finally, the case discussed the issue of jurisdiction of the Copyright Act. To determine whether the infringing activity occurred in Canada, the “real and substantial connection” test should be used. Where there is a real and substantial link between the infringing activity and Canada, the Copyright Act will apply. Whether such a connection exists will depend on the specific facts of each case so that the location of the host server will not be determinative. Therefore, an intermediary may not necessarily be liable under the Copyright Act because its host servers are located in Canada. Conversely, an intermediary may not escape liability simply because its host servers are in located abroad.