Appeals court strikes down controversial 'iPod tax'

A proposed levy on digital storage devices, known as the "iPod tax," has been quashed by the Federal Court of Appeal after opponents argued it assumed illegal behaviour on the part of Canadian consumers.

Following hearings on Jan.9, the court ruled that the Canadian Copyright Board did not have the right to impose new taxes on digital music players and storage devices. The taxes were to be introduced later this year.

The proposed levies included a $2 tax on 1 GB removable electronic memory cards, $5 tax on digital audio players no more than 1 GB and an extra $75 on digital audio players more than 30 GBs.

In its decision, the FCA stated: "The Copyright Board erred in law when it concluded that it has the legal authority to certify the tariff that CPCC (Canadian Private Copying Collective) has proposed for 2008-2009 on digital audio recorders."

Small tariffs are currently in place for such items as rewritable CDs and cassettes. The CPCC, a non-profit agency that represents the music industry, first requested a levy on removable electronic memory in its 2003-2004 tariff proposal.

The Retail Council of Canada opposed the tax, saying it created a non-competitive market environment for retailers and assumed anyone that owned a storage device was illegally copying and sharing digital files.

"On behalf of retailers and consumers, RCC welcomes this decision," Diane J. Brisebois, president of the Retail Council of Canada, said in a statement Thursday.

"This has been a very long battle, but a necessary one. Retailers have fought against these levies since their creation in 1997 because it taxes a product based on what a consumer possibly could use it for."

The Copyright Board initially concluded that there was insufficient evidence to warrant a new tax; however, the CPCC noted the growing popularity of digital memory devices is cause for concern.

"Our surveys show the vast majority of copies that people put on their iPods come from sources other than legitimately purchased copies," said David Basskin, the director of the CPCC.

According to a CPCC media release, "During the period from July 1, 2005 to June 30, 2006, 25 per cent of all the content copied onto electronic memory cards, including cards of all formats and capacities, was music, and 14 per cent of respondents copied only music."

Comments are now closed for this story

DW
said

Will the stupidity of our government ever stop?
Better yet why do we keep electing politicians of this calibre it makes me wonder who is the stupid one the politicians or us for electing them.

Paul Mense
said

If this tax had gone through, it would only have encouraged more Canadians to cross the border into the US, go to the nearest electronic store that sells iPods, digital music players, etc. etc., and bring it across the border into Canada, Chances are, it would be cheaper anyways. If border officials inquire about your music player, how are they going to prove that you had bought it in the US when you say to them that you purchased it in Canada and brought it with you into the US? Only in Canada do they come up with stupid taxes like this one. Glad it thrown out.

RC
said

Thank goodness this stupid tax will no longer be imposed. If the canadian music industry really want to earn money, they should come up with more quality songs that people will buy. They can't blame owners of mp3 players or memory cards for that and that's why they want to milk us for their "loss of income". This is just greed.

Kim
said

What even happened to the presumption of innocence?

Sheesh! Thanks God the appeals court developed some sense for a change!

N
said

Hmm. Pretty dumb idea. Good that it didn't pass.

Terry H.
said

Thank goodness someone in this country has some common sense. The government seems to be letting the greedy entertainment slimebags get whatever they want lately. These outfits like the RIAA in the states, and the CPCC here in Canada have been getting away with digital murder. Can you imagine, wanting to tax something for what it COULD be used for. What despicable morons they are.

Johnson Mapple
said

The same kind of ruling should apply to property evaluations in some BC communities where their taxes have been adjusted drastically to reflect FUTURE worth!

GJM
said

PS Bob - I made no mention of civil vs criminal liability. Illegal is illegal, no matter what courtroom you find yourself in.

And yes, the upshot of the argument of the US music industry is that they would expect you to make individual purchases in each desired format. Look into it for yourself, it's just a few mouseclicks away.

GJM
said

Bob, thanks for the snide remark. What I was referring to was comments and action following on the heels of the case in the US where the young lady was found guilty in court of storing music in her Shared folder. The US music industry desires to tske things to the next level by making it illegal to copy "your own" CDs into mp3 (or whatever) for "your own" use.

Apologies - I'll make it more apparent for you next time.

Joe
said

I've got an idea to replace the iPod tax. Since someone needs to use speakers to play pirated music, let's tax all speakers, headphones and other sound reproduction devices! That makes as much sense as taxing iPods and memory cards.

J-F (Ottawa)
said

Call me old fashioned, but I still buy CD's at music stores...I've downloaded songs in the past and have always got some kind of virus and spam from it so I gave up.

However for those who want to purchase an iPod, I agree with this decision. The proposed tax made no sense.

Richie
said

how about taxing them because they're polluting the water table? no of course not... we couldn't do that.

Shan
said

I am really surprised it had to go to court to strike down that ludicrous tax. I wish they went further and removed the tax on burnable DVD and CDs. I use all of mine for hard drive backups and storage of my digital pictures.

Marc
said

I'm glad common sense prevailed in the end. I do not own an iPod or any type of portable music player, but I would have been affected by this ridiculous tax simply because my digital camera uses a 2 GB removable memory card. When I heard of the proposed tax I was annoyed at the inherent assumption I -and all users of portable electronic memory- would use these storage devices to pirate copyrighted material.

wayno
said

THis is just the start folks.there is alot more coming very soon!copy and paste this link to see what i mean.http://www.digital-copyright.ca/node/4445

BL
said

Why should I have to pay ANY tax on my portable MP3 player? I use it ONLY for my purchased audiobooks and public domain podcasts - NEVER for any music (ripped, pirated, or purchased).
This is the same sort of mentality that taxes me $100 for air conditioning in my car - never mind the tests which have proven that a/c is more fuel effecient than driving with your windows rolled down! BTY - I do drive with my a/c on (to stay cool) AND with my window down ('cause I like the fresh air) - why not, I've paid my a/c fuel waster tax so I can darn well do as I please!

K White
said

Before the Writable CD tax, I used to love using CDs as a quick and easy way to transfer data from one place to potentially other places. Also with kids who tend to scratch up both mine and their own cds easily, I liked to make numerous backup copies of discs. I never made any illegal musics copies.

Since I am now getting charged for copying music on to CDs, I now let my kids do it. We're paying for it regardless, and not to use a service we've paid for would be a waste.

Bob
said

TO GJM

You bring up an unfortunate case of failure to read. Most of the articles about the ripping CDs being illegal is blown out of proportion. They usually left out the "in your Shared Folder"...meaning you can/will upload them. That's what that was about...not the ripping as a process. Though...in reading it, it is very confusing (even to the person who was trying to explain it!).

To Artists like to eat too:

Downloading copyrighted material is NOT stealing...otherwise it would be a CRIMINAL OFFENSE, not CIVIL liability. The word your looking for is INFRINGEMENT.
And a question to your last point about file or CD. Are you suggesting that people buy two copies of music if they want it on Ipods and CD's? I'm curious.

Note: Capitalization is for emphasis.

Mark - Powell RIver
said

This seems like such nonsense tax and all it would do is put already non-competitive Canadian retailers on an even worse footing. For me, I'd just buy my next Ipod (or whatever) in the US and totally avoid the tax. I already do most of my shopping in the US so how would this next tax be any different.

J
said

Records company have no say in this tax. This is decided by copyright legislators. There has been a hidden tax in all media devices for years.

Try reading up on copyright law!

Artists like to eat too ....
said

1) Artists are entitled to income from copyrighted material. They deserve to make an income.

2) Downloading copyrighted material without permission or compensating the artist is STEALING however you may try to justify it to yourself.
3) This ruling is appropriate as it was wrong to assume the use of the device would be for illegal purposes.
4) If you like an artists work then pay for it in whichever format you prefer to get it be it a file or CD.

GJM
said

To Kevin,

Check out recent US litigation involving the recording idustry saying that converting your own CDs to mp3 is a violation of copyright. You may own the CD, but only in the format in which it was originally purchased. Let's hope we don't see that extended to Canada.

Sierra
said

Quote "Our surveys show the vast majority of copies that people put on their iPods come from sources other than legitimately purchased copies," said David Basskin, the director of the CPCC. endquote

I dispute that survey result... and the courts were exactly right in thier decision. I may be in the minority but everything on my I-pod and hard-drive and other media has been legitmately purchased. I'm glad the court got it right this time.

Downloading Pete
said

Be clear people, downloading music in Canada is NOT illegal. What is illegal is uploading music for distribution. Therefore, there is no such thing in Canadian law as illegal downloading of music; the courts have been quite clear on this.

This tax was silly from the start and was motivated by record companies. Musicians make most of their $ from touring not record sales where there see only a very small fraction of the sale value.

The music industry continues to pay for not adapting quick enough to a more conveinant and simple way of accessing music. Instead they have chosen to hold on to a practice that has over charged music buyers for decades. They will continue to lose money until they wise up and embrace the technology and use it to their advantage for sales and promotion.

I have no sympathy for records companies as I have not bought a CD for well over a decade. I support the bands by buying tickets to their shows. Most tickets are over priced these days, but that is fair enough and I think bands make up for lost revenues quite easily with $150 seats. I will not buy their music any longer in the old cd version, which might as well be an 8-track or even record for that matter.

Tom
said

Quote"Ian
To tax all storage devices due to the possiblity of illegal use is absolutely absurd. What is next taxing the memory that is inside my computer? What about the sale of satalitte receivers which can only pick up illegal channels? This taxation should be removed or in the least restricted to portable MP3 players. Let the musicians cry that they can't sell a $.50 CD for $20-30.
"

The value of a product or service is governed by what a buyer is "willing" to pay and feel worth that amount.

Either the music companies think they garbage is worth more than the consumer is willing to pay, or the consumer is willing to pay that amount because they feel its worth it.

With the second option its clear some consumers have voiced they opinion(s) with downloading or other venue streams.

RK
said

My goodness... they wanted to impose a $75 tax on 30 GB+ music players??? That is crazy! That is excessive if you ask me. I'm glad to hear that it was struck down.

LMAO....
said

If you tax it, you are a Canadian. That is the mentality of this government. Why don't you just give it a rest and give a real break!!!

MQJ
said

Good news. I have never understood this tax at all. I still don't know if it is legal in Canada to make copies of music even though I have 'theoretically' paid for it via the tax on blank CDs. If so why is the industry still complaining.

And where does the money go anyway?

Sorta like taxing paper because I might Xerox copyrighted print material -- hey, there's an idea!!

Bob
said

Stop bashing musicians for this. Chances are they wouldn't see a penny of it anyways. This is about the Canadian Copyright Board and their ill-advised attempt at more money...for them...not musicians.

Ernie
said

When the first tax on disc storage devices came in I stopped buying Canadian artists. All I needed to do was to store my own photography. I do not like anything about Canadian music. I am forced to suport it through taxes but I do not listen to it.

An Apple Dealer in BC
said

The first iPod tax was idiotic, and was quietly rescinded. The recording artists never ever got their money. It's still sitting in limbo and no one knows how to distribute it years later.

Assuming illegal behaviour on the part of consumers is a serious mistake.

Furthermore, the CPCC is an unelected body, and has no right to tax.

I am sure this issue will rear its head again in the future until the Supreme Court of Canada finally puts a stop to this insanity. Mark my words.

Pat_Pending
said

This appears to be a sound decision. A majority of flash memory cards are used for digital photography, not for storing infringing copies. Also, I dispute CPCC's allegation and I firmly believe that a majority of music on iPODs is legally obtained (the SCC confirmed that downloading files is legal in Canada).

Industry groups like CPCC have got to realize that the world is changing, and the industry must change along with it. The CPCC represents "middle men" who stand between the artist and the consumer. I doubt that any of the money raised through the new tax would have made its way into the pockets of struggling new artists. It's time for the "middle men" to step aside.

Rock on music lovers, rock on.

Karl Marx
said

It's about time. Hopefully the other garbage tax will be removed as well in the future, if not already.

Billy
said

A tax 'just in case you download'. We should put a tax on cars 'just in case you drink and drive'.

Bonnie
said

This was a stupid idea right from the beginning. Just another attempt to compensate millioinaire singers/artists for their work. Aren't they making enough for what they do? Not like they are saving people's lives or something. If they would have approved this tax, it only would have furthered the exodus of Canadian dollars to the US. It's time to become more competitive in that realm not less so! In addition to that, aren't we presumed innocent until proven guilty? I buy all my music off of itunes. If this tax was approved it would be the same as if I had to pay twice for the same song. How stupid is that?!

Bart F.
said

Excellent news! Just because we are Canadians doesn't mean we need another stupid tax!

sherry
said

Thank GOD!

tonysop.
said

Good to see that lobby groups will not get their way for once. I'm sure we haven't seen the last of a ridiculous tax in this regard.

JW
said

This is good news. No one ever pointed out that removable media such as SD cards are more widely used for cameras rather than music devices. While there are a few music devices that take flash memory, the vast majority of flash cards go in cameras and other devices NOT typically used for music. It would have been hard to swallow, that Nelly Furtado or some other Canadian music artist, would get a piece of the cost of my 4 Gb SD camera memory!! It was also a good decision in regards that the tax was based on a premise that all consumers are pirating music. Guilt before innocence, hmm, I always thought it was the other way round.

Kevin
said

It is about time common sense prevailed. Like the article stated it make it appear that all people who buy mp3 players are thiefs. I have over 500 CD's that I have converted to mp3 and over 200 DVD concerts/movies that I feel justified into recording onto mine and my childrens Ipods. Even though I have downloaded music if I find an artist I like I buy the CD. I refuse to buy any CD's put out by Sony ever since I bought a David Gray CD and I couldn't rip it to mp3. If it is on a Sony disc I will download it. It is useless if I can't rip it. Like most people I don't listen to CD's any more. I have over 10,000 songs on my Ipod.

Once in a while we get a ......
said

Good decision (IMHO)

Ian
said

To tax all storage devices due to the possiblity of illegal use is absolutely absurd. What is next taxing the memory that is inside my computer? What about the sale of satalitte receivers which can only pick up illegal channels? This taxation should be removed or in the least restricted to portable MP3 players. Let the musicians cry that they can't sell a $.50 CD for $20-30.

Ki-Som
said

It was a stupid tax. What it was saying was that if you buy a memory card, you are going to use it to download music. Excuse me, but I have three memory cards and they are used to hold my photos from my digital camera. So I am suppose to pay a copy right tax, on a memory card that I know won't be used to download or store music? STUPID and I am glad the courts saw it that way.

Blake from Montreal
said

Hurray for the little guy! This proposed tax was simply unfair to everybody. I recently bought a memory card for use in my camera. How that violates anyone's copyright is beyond me. Even worse is the proposed levy by the SAC (Songwriters Association of Canada): a five dollar tax on every internet or cell phone account. Even the record companies here say that's a nonstarter.

Gary Pocock Ottawa Canada
said

I am surprised that the board hasn't put a tax on printer copiers to protect copyright material or on computers which can download just about anything. Interference in the marketplace by the government is not a mandate they should assume. Technology will always prevail. It's time the government look for other ways to collect taxes. Why not try a happiness tax.

Gord in Victoria
said

Too right! The Canadian Copyright Board has been put in their rightful place. Like the recording industry in the US, they need to get out of their 20th century mentality and adapt to a new age. Their tariffs were lawfully declared illegal, and they have no basis to exist.

Lynn
said

Looks like common sense prevailed for once! This wasn't about copyright it was about greed plain and simple.
Thank you all retail outlets who took the leadership role on this issue.

Ron - Cambridge
said

I guess if this tax were to come in we could make all the illegal copies of music and videos we want since we are paying for it anyways.

Glad it was struck down.

canucklehead
said

I'm glad it was struck down. I feel if imposed, it would likely INCREASE the amount of illegal downloading.. I mean, if you've already paid a tax assuming you'll download/share, why not do it?

JJ
said

Thank goodness someone has taken up the fight against idiotic government policies!

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