Canadian ISPs Not Liable for Music Royalties

Canada's highest court dismissed an effort by composers to force companies such as BCE Inc. and Rogers Communications Inc. to pay royalties when their Internet networks are used to swap copyrighted music.

In a 9-0 decision, the Supreme Court of Canada ruled that Internet-service providers are neutral and not responsible for any copyright infringement that may occur when digital recordings are traded. It argued that making companies such as BCE, which owns Canada's largest ISP, pay royalties would slow telecommunications development and hurt the economy.

``Parliament did not want copyright disputes between creators and users to be visited on the heads of the Internet intermediaries, whose continued expansion and development is considered vital to national economic growth,'' the court said in a decision written by Justice Ian Binnie.

The ruling represents a setback for the music industry, which is trying to stop the illegal downloading of 2.6 billion songs a month. The Recording Industry Association of America, which compiled that figure, lost a Washington court case in December in which it sought to force Verizon Communications Inc. to name Internet subscribers who shared music.

Music companies have sued individuals in the U.S. and Canada, accusing them of stealing intellectual property.

In the Canadian case, BCE, Rogers and other ISPs appealed a Federal Court of Appeal decision that ruled they became participants in music piracy by creating a cache, or temporary storage file. They argued in the Supreme Court that it's impossible to know whether a computer file is being transferred illegally.

The case is Society of Composers, Authors and Music Publishers of Canada v. Canadian Association of Internet Providers, 2004 SCC 45.