Federal Court Provides Guidance Calculating Interest on Levies and Penalties
Canadian Private Copying Collective v. Data Media Products Inc., 2009 FC 1277 (Simpson, J.)

December 16, 2009

Jessica Caplan for the Canadian Private Copying Collective
No one appearing for Data Media Products Inc.

The Canadian Private Copying Collective (“CPCC”) brought an action against Data Media Products Inc. (“Data”), an importer and seller of blank audio recording media, for unpaid levies, audit costs, interest and a statutory penalty after an audit revealed Data had underreported its sales of blank audio recording media by approximately 18%.

Interest on Levies When Sales Date Unknown
The Court ruled that a levy is only payable on media that the CPCC could prove was sold or disposed of. Interest accrues from the proven date of sale/disposal.

As the CPCC could not pinpoint the actual date(s) on which Data’s media was sold/disposed of, the Court concluded that interest could only be applied from the date of the audit, being that it was the first date on which the CPCC could prove sale/disposal of the media.

Interest Due on Audit Costs
The Court noted that a demand for payment must be made in order for interest charges to apply, and that the filing of this action in court was considered to meet this “demand” requirement.

Penalty
Although the Copyright Act allows for a statutory penalty of up to five times the amount of unpaid levies to be applied, the Court decided that the maximum penalty was not appropriate in this case. Instead a penalty of two times the amount of unpaid levies was appropriate in view of the respondent’s under-reporting of sales and a need for deterrence.

By: Sue Diaz, Deeth Williams Wall LLP