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 it had given no permission in respect of its rights under s. 3(1)(f) of the Copyright Act:
(f) [Copyright includes the sole right,] in the case of any literary, dramatic, musical or artistic work, to communicate the work to the public by telecommunication... .
The Court granted the ESA's appeal and quashed the tariff on the basis that s. 3(1)(f) applies only to performances, not to reproductions. Because a digital download is meant to create a permanent copy on the users' machines, it is a reproduction rather than a performance.
Paragraph 3(1)(f) originally read:
(f) In case of any literary, dramatic, musical or artistic work, to communicate such work by radio communication.
SOCAN unsuccessfully argued that the expansion of s. 3(1)(f) to "telecommunication" demonstrates Parliament's intention to expand the communication right to technologies that involve transmitting data in a way that gives the end user a permanent copy of the work. The amendment was part of the 1988 Canada-United States Free Trade Agreement Implementation Act. Before CUFTA, Canadian courts had found that "radio communications" covered Hertzian radio waves but not communication by co-axial cables. Under CUFTA, Canada was obligated to extend Copyright to transmission by co-axial cable as well.