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 such an online sale amounted to communicating the works to the public by telecommunication - a right that SOCAN's members held under s. 3(1)(f) of the Copyright Act, and which had not been licensed to game producers.
The Court granted the ESA's appeal and quashed the tariff on the basis that s. 3(1)(f) applies to "communication" by way of a performance, and not to reproductions. Abella and Moldaver JJ. stated (at para. 42):
The introductory paragraph [in s. 3(1)] defines what constitutes "copyright". It states that copyright "means" the sole right to produce or reproduce a work in any material form, to perform a work in public, or to publish an unpublished work. This definition of "copyright" is exhaustive, as the term "means" confines its scope.
As a digital download is meant to create a permanent copy on the users' machines, it is a reproduction rather than a performance. As "in this case...there is only one activity at issue: downloading a copy of a video game containing musical works" (para. 41), that activity should be regarded as being protected by the reproduction rather than performance branch of copyright.
The specific rights listed in para. (a) through (i) illustrated rather than expanded the scope of protected rights. For example, whereas para. (f) was an example of a performance-related right, "the rental rights [of a sound recording] in s. 3(1)(i)...can fit comfortably into the general category of reproduction rights" (para 42).
After noting that the SOCAN members generally would already have negotiated the licensing of their (reproduction) copyright to the games publishers, so that they in effect were seeking a second (telecommunication) royalty (even though such entitlement clearly did not arise where the games instead were distributed through CD sales), the Court also emphasized the importance of the principle of technological neutrality - Parliament should be presumed not to intend to impose additional costs to interfere with new, more efficient technologies such as digital distribution (para. 9).