In Capital Records v. Tennenbaum, the US District Court for Massachusetts rejected the defendant file-sharer's defence that his sharing of musical files over a peer-to-peer (P2P) network was a "fair use" that should insulate him from liability under the US Copyright Act. The Act allows limited "fair use" of copyrighted material without the rights holder's permission.

The defendant had contended that his uploading of more than 800 songs onto a P2P network was fair in light of the statutory criteria requiring courts to consider (a) the purpose and character of the use; (b) the nature of the copyrighted work; (c) the amount and substantiality of the portion taken; and (d) the effect of the use upon the potential market.

In rejecting the defence before trial, the court commented that the defendant's suggested interpretation of the US Copyright Act" proposes a fair use defense so broad that it would swallow the copyright protections that Congress has created. Indeed, the Court can discern almost no limiting principle: [thus interpreted, the Act] would shield from liability any person who downloaded copyrighted songs for his or her own private enjoyment."

While the court found that there might be certain circumstances in which a file-sharer could assert such a defence, it suggested that such defences might be limited to acts undertaken in the "infancy" of P2P file-sharing, where the purposes of the use were otherwise in line with the fair use case law in the US. This was not the case for this defendant, who had shared hundreds of songs over the course of many years.

After the court's rejection of the fair use defence, the case went directly to a jury without significant dispute as to the extent of the file-sharing, and the defendant was assessed $675,000 in civil penalties based on the US statutory damages regime.

McCarthy Tétrault Notes:

The findings on fair use are consistent with other results in the US courts. However, this decision must be applied with care in a Canadian context, where the "fair dealing" doctrine requires all such defences to be anchored in the specific purposes set out in Canada's Copyright Act. The US Act's fair use defence allows, in theory, for any use to be justified as fair, while the fair dealing defence in Canada is only available in certain enumerated situations — such as for research or private study. The enumerations under the Canadian Act make it far more difficult for Canadian mass infringers to argue that a particular use was "fair" in any given context.

Recent calls have been made to adopt an open-ended fair use system in Canada. These calls do not address the fact that US courts have applied fair use law on a common law basis since 1841, and on a statutory basis since 1976. In light of this long line of jurisprudence, the doctrine has some meaning and boundaries, allowing outrider cases such as Tennenbaum to be more easily handled.

By contrast, adopting fair use into the Canadian legal system, which lacks this backdrop, would result in confusion and unpredictable application. The resulting uncertainty would inhibit both users and creators from understanding what is permissible and what is not. This concern is a major reason why a coalition of close to 50 prominent Canadian organizations joined together in the recent round of copyright consultations to oppose calls for a new fair use system. Their joint submission was authored by Barry Sookman and Daniel Glover of McCarthy Tétrault LLP.

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