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Judge tosses Canada's 'iPod tax'

Regulatory fees imposed on MP3 players aren't supported by law, a court rules.

A Canadian judge on Thursday set aside copyright rules that had imposed regulatory fees of as much as $25 on the purchase of iPods and other MP3 players in that country.

The country's copyright regulators traditionally have imposed a small surcharge on media such as cassette tapes and blank CDs, using the revenues to pay musicians and record labels whose works are being copied at home by consumers. Late last year, the Copyright Board applied this to MP3 players, which they said consumers also used for "private copying" of music.

A coalition of retailers and electronics manufacturers sued, saying the ruling was unfair. In a decision released Thursday, federal Judge Marc Noel ruled that the MP3 player fees did not seem to be supported by the letter of the law, and set them aside.

"It is for Parliament to decide whether digital audio devices such as MP3 players are to be" included, he wrote.

The decision marks a victory for retailers, manufacturers and sticker-shocked consumers in the country, even if its effect might be temporary. However, it did uphold the foundation of the country's private copying rights, which courts have used as grounds to say consumer file-swapping is legal.

That series of decisions has put the country's legal system at odds with much of the rest of the world, which is cracking down on operators and users of peer to-peer networks with criminal and civil penalties. Record labels have appealed the file-swapping decision.

The MP3 player ruling will likely mean a quick drop in prices for iPods and other devices in Canada. The board's decision last year imposed a $25 fee on players with more than 10GB of memory, $15 for players above 1GB, and $2 for smaller players.

The shoppers' reprieve may not last forever, however. The judge made it clear that he was sympathetic to the Copyright Board's attempt to impose the fees on MP3 players. Devices such as iPods are in fact used to copy large amounts of music and could potentially do more damage to copyright holders' interests than ordinary blank CDs or cassettes, he said.

"However, as desirable as bringing such devices within the ambit of the (fees) might seem, the authority still has to be found in the" law, he said.