The Canadian Recording Industry Association this week quietly filed documents in the Federal Court of Appeal that will likely shock many in the industry. CRIA, which spent more than 15 years lobbying for the creation of the private copying levy, is now fighting to eliminate the application of the levy on the Apple iPod since it believes that the Copyright Board of Canada's recent decision to allow a proposed tariff on iPods to proceed "broadens the scope of the private copying exception to avoid making illegal file sharers liable for infringement."

Given that CRIA's members collect millions from the private copying levy, the decision to oppose its expansion may come as a surprise. Yet the move reflects a reality that CRIA has previously been loath to acknowledge – the Copyright Board has developed jurisprudence that provides a strong argument that downloading music on peer-to-peer networks is lawful in Canada. Indeed, CRIA President Graham Henderson provides a roadmap for the argument in his affidavit:

"First, the Board has stated, in obiter dicta, on several occasions that the Private Copying regime legalizes copying for the private use of the person making the copy, regardless of whether the source is non-infringing or not. Therefore, according to the Board, downloading an infringing track from the Internet is not infringing, as long as the downloaded copy is made onto an 'audio recording medium'…

Second, also in obiter dicta, the Board stated that the private copying exception in Section 80 is not conditioned on the existence of a tariff to collect royalties covering the medium onto which copies are made.

Third, in combination with the aforementioned obiter dicta in the Board's other decisions, the Decision [the iPod decision] could potentially be interpreted to allow the copying of music files from any source – whether legitimate or illegitimate – onto any type of device ordinarily used by individuals to copy music, such as personal computers…"

While Henderson and CRIA make it clear that they disagree with this interpretation, they are obviously sufficiently concerned that it reflects Canadian law that they have burned their remaining bridges with Canadian music in order to try to persuade the Federal Court of Appeal to allow them to intervene in iPod hearings. In fact, with the Canadian labels having left the organization, CRIA has now:

irrevocably split with the Canadian Private Copying Collective (on which CRIA General Counsel Richard Pfohl serves as a member of the board of directors), telling the court that "CRIA Members do not control the CPCC with respect to decisions to file particular tariffs. And in the case at hand, CRIA did not have the authority or means to prevent the CPCC from filing the [iPod levy tariff]."

openly acknowledged that its concerns rest with foreign artists, as it complains about the preferential treatment for Canadian artists under the private copying system and argues that "this has meant that under the Private Copying regime, CRIA Members receive compensation for only a small fraction of their recordings that are copied."

CRIA's attempt to intervene is somewhat odd, not only because it represents a public acknowledgement of the argument for legalized P2P in Canada, but also because CRIA's intended arguments if granted leave to intervene are easily rebutted. The Henderson affidavit outlines the organization's seven arguments:

the Decision failed to consider the fundamental importance of exclusive rights in Canadian copyright law [not true – CRIA itself sought the creation of the levy to grant consumers a license to make personal copies]. the Board failed to consider the implications of the combination of the Decision with statements in its prior decisions to the effect that the Private Copying regime legalizes copying for the private use of the person making the copy, regardless of whether the source is a non-infringing copy or subject to a levy. [in other words, the Board's decision makes it clear that P2P downloading is legal] by broadening the scope of the exception to devices never intended by Parliament to be covered, the Board has potentially and inappropriately transformed the 'private copying' exception into a public license [yet in 1996 CRIA told a House of Commons committee that "the proposed private copying regimes should not create yet another exemption, but should be structured as a statutory license."] the Decision failed to adequately consider and apply policy principles related to copyright. Any decision or combination of decisions that exempts unauthorized P2P downloading from infringement would be contrary to the public interest because it serves as a disincentive to investment in the production of music and the dissemination of legitimate copies of music [not true – a compensation system for P2P is arguably in the public interest as it ensures that artists get paid, a position supported by Canadian musicians]. the Decision failed to adequately consider and apply the specific policy principles behind the private copying exception [not true – the Decision is nothing but the application of the policy principle that the levy is technology neutral]. the Board was wrong to broaden the scope of the private copying exception to avoid making illegal file sharers liable for infringement [the clearest statement from CRIA that private copying as construed by the Copyright Board legalizes P2P]. the Decision failed to consider Canada's international and bilateral treaty obligations related to copyright and related rights [an issue for Parliament, not the Copyright Board or the Federal Court].

Hearings in the iPod case are not likely to occur until 2008, yet these filings from CRIA will reverberate long after that hearing concludes. It is not every day that the recording industry acknowledges an argument widely known within legal circles – downloading music in Canada for personal purposes is arguably legal as it is compensated activity covered by the private copying levy.

Update: Ars Technica and Billboard cover the story.