Canada's Supreme Court ruled today (June 30) that Internet service providers do not have to pay royalties to composers and artists for music downloaded by Web customers.

Canada's Supreme Court ruled today (June 30) that Internet service providers do not have to pay royalties to composers and artists for music downloaded by Web customers.

Companies providing wide access to the Web are merely "intermediaries" who are not bound by Canadian copyright legislation, the court said in a 9-0 ruling.

At issue was an effort by the Society of Composers, Authors and Music Publishers of Canada (SOCAN) to force Internet service providers to pay a tariff.

SOCAN also wanted to extend Canadian copyright law beyond the country's borders and apply it to offshore Web sites that serve Canadians.

Opposing the effort was the Canadian Assn. of Internet Providers, including the Canadian subsidiaries of some of the world's high-tech giants, like Sprint Corp., America Online Inc., MCI, IBM Corp. and Yahoo! Inc.

The service providers argued that artists should seek royalties directly from Web sites offering their work, not from companies providing wider-ranging access to the Web.

The case was closely watched abroad because of the international implications for the computer and music industries. The music industry says it has lost billions of dollars in revenue in recent years as people shunned traditional stores and downloaded music from the Internet.

In the United States, the RIAA has launched about 2,000 lawsuits against file swappers since last year. The RIAA has settled hundreds of those cases, generally for a few thousand dollars each.

The attempt to collect instead from ISPs was significant because they provide an easier target for litigation than tracking down a myriad of individual Web sites and customers.

The Canadian Recording Industry Assn. (CRIA) lost a Federal Court challenge in March to force five Internet service providers -- including Bell Canada, Rogers Cable and Shaw Communications -- to hand over the names and addresses of 29 people who allegedly shared hundreds of songs with others in November and December.

CRIA wanted the names of subscribers who are currently identifiable only through a numeric Internet address and user handles. The association could not begin civil litigation until the alleged offenders were identified.


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