Friday, April 15, 2016

Review of Peter S. Grant's USERS’S GUIDE TO CANADIAN COPYRIGHT TARIFFS 2016 Second Edition




The unique and ubiquitous Peter S. Grant  and his team (including Grant Buchanan
Daniel G.C. Glover, and Keith D. Rose)  have recently published a book entitled USERS’S GUIDE TO CANADIAN COPYRIGHT TARIFFS 2016 Second Edition.


This book contains some introductory information about Canadian copyright collectives, the mandate of the Copyright Board, the Board’s record in judicial review, and an interesting and useful summary of how the Supreme Court of Canada has treated the Board with respect to the “sempiternal” issue of standard of review, as the great retired Justice L├ętourneau called it. The introduction concludes with a chart of how the $438 million of annual tariff revenues in 2014 was split between the various collectives.  It should be noted that not all of the revenue of all of the copyright collectives in Canada falls under Board tariffs. Moreover, in the educational sector virtually all of the K-12 school boards and many if not most universities and colleges have ceased payments to Access Copyright. 

There are then about 100 pages of Summary Tables of Rates, conveniently broken down into the major categories. One can quickly find out actual numbers. There are numerous references to the Board’s certified and pending tariffs, including URL hyperlinks. However, these UR hyperlinks are, unfortunately, not useful since the book is only available in paper and not electronic format. More on the book’s format below…

There is a fairly detailed and interesting discussion of the recent CBC v. SODRAC so-called “arbitration” case, and how the SCC dealt with it.

The balance of the book’s nearly 600 pages consists of currently certified or pending tariffs. This section contains the most useful aspect by far of the book, which is a “chronology” of summaries of previous Board decisions dealing with the particular tariff and summaries of Court cases that may have dealt with the particular tariff. These summaries are fairly detailed and appear to be generally accurate. This aspect of the book represents considerable added value and clearly required an enormous amount of hard work on the part of the many people at Mr. Grant’s firm who assisted him in this project.

There is an alphabetical index to tariffs and an index organized by collective and tariff number.

Finally, there is an alphabetical list of judicial decisions discussed in the book that relate to current tariffs. Older decisions, some of which are extremely relevant to Board practice, such as Vigneux or Maple Leaf are not included in this edition. The book covers only the modern Copyright Board which was established in 1989 as a successor to the previous Copyright Appeal Board, which existed for over fifty years.

This book complements another publication by Mr. Grant entitled Communications Law and the Courts in Canada 2014  which I reviewed back in 2014 here.

By and large, the book avoids any editorial comment on the merits of any particular Board or court decision. However, Mr. Grant cannot resist repeating his comment made in the Communications Law books about how the Federal Court of Appeal has twice overturned the Board on the interpretation of “audio recording medium”, thereby creating what Mr. Grant calls a “significant loophole” in Part VIII of the Act. I must confess to being rather proud of my involvement in those two court decisions and the exclusion of smart phones, thumb drives, hard drives, microSD and all kinds of other media now known or presumably to be known in the future from the reaches of the Canadian Private Copying Collective.

This book once again reminds me of how easy and useful it would be for the Board to improve its website by providing links to each court case dealing with judicial review of its decisions. This would be a simple task that shouldn’t take more than a few days all told of research and website updating. It would also be useful to list all of those decisions and a brief note or even head note about what they held on a separate webpage on the Board’s site. That might take a bit more time, but Mr. Grant has already provided a model for such a task.

This book will be very useful – indeed indispensable – for anyone in the small circle if counsel who practice before the Board, works at the Board, works for a collective, or works in Government and is interested in how the Board functions.

The book will help to make the work of the Board more transparent. The Board’s website and its annual reports are a good start in this respect. But the Board’s website does not measure up in terms of utility in important ways to other comparable ones. I’ll deal with this some other day, but for the moment, one can readily note:

  • A very frustrating “search” function
  • Lack of “docket” tracking for past and pending cases, as we have for the Federal Courts, the Supreme Court of Canada, the Competition Tribunal, e.g. here for the Stargrove case, etc.  Note that the SCC and the Competition Tribunal actually provide online virtually all important documents filed – subject to confidentiality issues, naturally, but even those exclusions are premised on the presumption that courts should be “open”. The Competition Tribunal manages to provide an excellent website, despite its smaller staff and budget than that of the Copyright Board.

Although the book is a useful step forward towards understanding how the Copyright Board works and what its decisions and tariffs actually do, it still requires a fair amount of prior knowledge on the part of readers in terms of “inside baseball” to take full advantage of all of the work that went into the book. The index helps – but is not sufficiently detailed to find out, for example, how much a “busker” has to pay to SOCAN. One has to know what tariff that particular activity would fall under.Once again, searchable electronic format would be very useful. 

Indeed, the book is very timely as attention is now being escalated and focussed in government, amongst several strange bedfellow stakeholders and counsel and, hopefully at the Board itself on how it can shorten its proceedings, lower the cost of these proceedings and render its decisions within an acceptable time frame. That conversation may now become even more urgent in light of the most recent decision of the SCC dealing with a Board decision, namely CBC v. SODRAC, which held, following arguments that I made on behalf of and with Ariel Katz and David Lametti, that Board tariffs are not de jure mandatory. 

That decision also acknowledged that there could be “broader questions concerning the legitimacy of or limits on the Board’s power to issue retroactive decisions” in the words of Justice Rothstein. Perhaps this was a hint. With respect to timelines of Board decisions, a useful feature for future editions of the book might be the inclusion of key milestone dates for each current pending or decided tariff, such as the date filed, the dates of the hearing, the date of the Board’s decision and the time period covered by the tariff. Compiling that information would be somewhat tedious but simple, since it is all already online in various bits and pieces at the Board’s website.

Clearly, Mr. Grant and his colleagues are not publishing this book in order to make money. The market for it is obviously quite small.  We should be grateful to them for making it available to interested folks at a relatively modest cost of $70.

However, I can’t help but note that the quality of paper and the very small font size of most of the book make it difficult to read in places. The paper is so thin that the ink on the other side of the page is visible. The book is published by Mr. Grant’s law firm and not by a major publisher, which may explain why it doesn’t meet the usual aesthetic, paper quality or legibility standard one would expect from my publisher, Carswell, or Irwin Law, for example – whose paper back publications are convenient and easy to read. 

Perhaps the potential market for the book is too limited to attract an established law publisher. However, given that the likely audience of this book consists of collective executives, public servants, law libraries, and  a small number of mostly very well paid Copyright Board practitioners,  it is likely that these purchasers might be willing to pay a bit more for a more legible edition. The obvious improvement in terms of format and utility would be to make the book available in electronic format either online or on DVD or both – so that the thousands of URL hyperlinks would actually work, and one could search quickly for what one wants.  Far be it from me to suggest business advice to Mr. Grant and his partners, but perhaps Westlaw might include the book one day in its very useful WestlawNext Canada website as part of its IP Source package.
 
Mr. Grant’s book will be a useful tool to those interested in the work of Canada’s Copyright Board, and an indispensable one to those closely involved with its work.


HPK

Thursday, April 14, 2016

Access Copyright v. CMEC re K-12 – Is it “Mission Accomplished” or "The End of the Beginning"?



or

???

I originally wrote about the Copyright Board’s February 19, 2016 K-12 Tariff decision and its immediate aftermath here. Below are some further developments.

Not surprisingly, Access Copyright (“AC”) is pursuing judicial review (“JR”, or an “appeal” in layperson’s terminology). Except for the surprising outcome that would potentially give it almost $10 million per annum based almost solely on the reproduction of “consumables” (assuming all school boards actually decide to pay – which is very doubtful - see below), AC lost badly on just about every other conceivable aspect – including some very important ones such as fair dealing, insubstantial copying, and its agency by ratification argument, about which the Board has effectively, even if belatedly, done a 180 degree turn around. Here is AC’s comparatively fulsome JR Notice of Application.

Somewhat surprisingly in view of the arguably much too high FTE rate of $2.46, CMEC, which represents school boards outside of Quebec, is not seeking JR. For those interested in Federal Court of Appeal procedure, there is no such thing as “cross” judicial review. Each party needs to launch its own JR on or before the 30 day deadline. In this case, only AC did so. CMEC (Council of Ministers of Education, Canada) will no doubt ably defend AC’s JR but has not commenced its own, perhaps for the reasons I speculate about below.

Moreover, CMEC’s counsel have now come out and proclaimed in a Lexology posting dated April 7, 2016 that
This decision represents a complete victory for the K-12 schools with respect to a number of important legal issues addressed by the Board in its decision, including the application of the fair dealing provisions contained in the Copyright Act (the "Act") to K-12 schools, the adoption of a quantitative test to determine the scope of "non-substantial" copying under the Act, and Access Copyright's ability to represent the interests of rights holders in relation to whom it has not formally entered into an affiliation agreement.

In terms of the specific rates approved by the Board, Access Copyright had initially proposed annual rates of $15.00 per student for the period of 2010-2012 and $9.50 per student for the period of 2013-2015. In its tariff decision, however, the Board certified royalty rates of $2.46 per student for the first tariff period and $2.41 for the second tariff period. If this tariff is ultimately taken up by the K-12 schools, these rates are expected to generate approximately $9.4 million per year for Access Copyright, or about $56 million over the course of the six years covered by the tariff.
          (Highlight added)

As I’ve suggested before, obtaining a rate lower than what AC seeks is not necessarily a major victory per se. AC is notorious for overreaching at the Copyright Board. Its currently proposed Post-Secondary tariff would represent a 1,300% increase over a previously negotiated rate that in turn pre-dated the CCH decision. AC got smacked down very badly by the Board in its Provincial Tariff, where it got only a fraction (1% and 2% for the periods involved) of what it sought. That decision is subject to JR. I should remind readers that the Province of Ontario, inexplicably and at great expense to its much beleaguered taxpayers, settled for an amount exponentially in excess of what the Board ultimately ruled – namely $7.50 per FTE.

For reasons which I explain in more detail on my earlier blog, the rates of $2.46 per student for the first tariff period and $2.41 for the second tariff period, based almost entirely on “consumables”) seem surprisingly high by a factor of about 500%. However, I will not speculate on whether there might have been grounds for CMEC to attack that result by way of JR.

So, I can only speculate that CMEC’s decision not to pursue its own JR may be based – perhaps in large measure - upon a possible assessment that it need not expend any more resources than necessary to fight a tariff that may not matter and be effectively optional in the end. Note CMEC counsel’s interesting wording in the Lexology piece: “If this tariff is ultimately taken up by the K-12 schools…”  (emphasis and highlight added)

CMEC may have concluded that its members can rely on fair dealing and clear whatever rights they may need in a more efficient and less expensive manner than pursuant a non-mandatory AC Copyright Board tariff. CMEC may be taking comfort in the recent CBC v. SODRAC decision from the Supreme Court of Canada, which indicates that the Board’s tariffs are not de jure mandatory. Indeed, even before that decision, the CMEC school boards stopped paying anything to AC in after 2013, as AC’s 2014 annual report confirms. I emphasize that I am only speculating, since CMEC naturally has not disclosed its strategy publicly.

Regarding the “mandatory tariff” issue, all eyes are naturally now turning to York University and its forthcoming three week trial at the suit of AC dues to begin on May 16, 2016. This case is based upon the mandatory tariff theory, now debunked by the Supreme Court of Canada. Indeed, York is being sued under the Board’s “interim tariff” imposed just before Christmas in 2010, which was not even a final certified tariff. This is not a copyright infringement action, and could not have been because AC has no standing on its own to sue for copyright infringement.

Of course, if York University - even with the authority of the recent CBC v. SODRAC decision of the Supreme Court of Canada  - should somehow fail to decisively prevail against AC on the “mandatory tariff” aspect which is the basis of AC’s forthcoming Federal Court case due to start on May 16, 2016, there could be big trouble for the entire educational establishment, including CMEC’s school board members.

 It’s also worth noting that many of the issues that will presumably be argued in this AC K-12 JR, such as those concerning fair dealing, will likely be argued much sooner in the JR of the Provincial tariff, which could be heard and decided even in the next few months. 

That decision from the Federal Court of Appeal could also come after the hearing but before the judgment in the AC v. York University trial. That could be interesting. And there is also the pending decision by the Copyright Board in the AC Post-Secondary case that concluded in January of 2016. While the Board has, in recent times, taken two years or even more to render a decision, one hopes that this time frame will now lessen dramatically to the judicial norm in Canada of six months or less. What the Federal Court of Appeal decides is binding on the Federal Court. What the Copyright Board decides could be influential, even if not binding. There are a lot of things up in the air now – and where, when and how they all finally land will be very interesting.

So, as far as the K-12 Tariff goes, CMEC may purport to consider that this is a case about “Mission Accomplished” and there’s only a little bit of clean up left to do in defending the AC JR, which may be largely determined in any event by the JR of the Provincial tariff.  It may be that things turn out that way, although we all know how recent history shows that “Mission Accomplished” is not always a safe conclusion.

Moreover, as in the Middle East, where the “Mission Accomplished” motto has achieved such notoriety, there are many players engaged in Canada’s copyright collective battles and each have complex agendas and nobody is in control. Thus, “Mission Accomplished” may not turn out to be the appropriate phrase. Is it possible that Winston Churchill’s immortal words may turn out to be applicable?

Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.

However, here is something a bit more concrete from Roanie Levy, AC’s Executive Director, in AC’s recently published Annual Report for 2015:

Post-secondary revenues are projected to drop from over $10 million in 2015 to less than $2 million in 2016, and the resumption of K-12 schools revenue remains uncertain, even after the recently certified tariff for K-12 schools.Our strategic plan anticipated that we would operate in the red for a certain time in order to complete the transformation—and we are prepared for that possibility.
 
In the Provincial-Territorial tariff decision and recent K-12 tariff decision, the Copyright Board’s troublingly opaque assessments lead to outcomes that are simultaneously unfair for rightsholders and impractical for users. These decisions highlight the systemic dysfunction in the Canadian copyright landscape today and further underscore the importance of legislative reform.
(highlight added)

All I can do, however, is to conclude, as Yogi Berra once said, “It's tough to make predictions, especially about the future.”

 HPK

Thursday, April 07, 2016

More On Mandatory Tariffs – the York U Conference Video & the York U Litigation



Here’s the video of the session on “Mandatory Tariffs” from the UNPACK SODRAC conference held at Osgoode on February 25, 2016.
  
The session starts at about the 21:30 mark. Ariel Katz speaks at about the 22 minute mark. I speak at about the 1:09:40 mark.

Mario Bouchard, Adriane Porcin and Bobby Glushko are in between.

Here are the slides from the participants:

Here is my most recent blog about all of this.

It is not without irony that this event took place at York University. Indeed, all eyes are now on York University to see if and how it will utilize the SCC’s ruling that Copyright Board tariffs are not de jure mandatory in its upcoming Federal Court trial where is it being sued by Access Copyright . This SCC ruling is set forth in about a dozen relevant paragraphs in the recent ruling from the Supreme Court of Canada in the CBC v. SODRAC case, quoted and further discussed here.  The three week long hearing is set to begin on May 16, 2016. This comes up, of course, in my talk.


HPK

Tuesday, March 22, 2016

The Mandatory Tariff Issue – The Follow Up and the Future – Implications for the Access Copyright v. York University Case. etc.


On November 26, 2015 the Supreme Court of Canada (“SCC”) issued what may prove to be its most important copyright ruling to date in terms of its effect on tariffs, the tariff making process, the Copyright Board and the copyright bar. This involved the “mandatory tariff” issue, upon which the SCC ruled clearly and certain concerns regarding the Board’s power to issue retroactively binding decisions, of which the SCC provocatively took note.

These aspects of the CBC v. SODRAC decision have received little attention to date but may prove far more important in both the short and long term than the ruling on reproduction rights and technological neutrality issues in the decision. The decision may have impacts such as the following:
  • It arguably could and should be a crucial threshold and potentially determinative issue in the Access Copyright v. York U litigation, which is set to go to trial in the Federal Court on May 16, 2016 for three weeks.  See more below
  • Needless to say, it could affect many other tariffs, and particularly the pending Post-Secondary tariff proceeding and the recently announced K-12 tariff, where it was not put in issue but may become an issue as I have suggestedif the school boards decide not to pay what they may regard as a greatly excessive rate.
  • It arguably could and should have a profound effect on the way things are done at the Copyright Board, and how the Board’s tariffs are received by potential users. In particular, whether users treat the Access Copyright tariffs as mandatory will be very interesting.
  • It will, hopefully, encourage the Board to come up with tariffs that are attractive and offer good value to users where collective activity is warranted and when compared to other unregulated alternatives. The result could enable such collectives to compete trough persuasion rather than coercion.
  • It will hopefully encourage the Board to greatly expedite and lower the costs of tariff proceedings and to eliminate retroactively binding tariffs.

 Justice Rothstein stated as follows in the CBC v. SODRAC decision:
(112) I conclude that the statutory licensing scheme does not contemplate that licences fixed by the Board pursuant to s. 70.2 should have a mandatory binding effect against users.

(113) I find that licences fixed by the Board do not have mandatory binding force over a user; the Board has the statutory authority to fix the terms of licences pursuant to s. 70.2, but a user retains the ability to decide whether to become a licensee and operate pursuant to that licence, or to decline.
He also noted in the very important footnote #2 that that the interveners (who I was proud to represent) had “raised concerns regarding the Board’s power to issue retroactively binding decisions in general”. The full twelve relevant paragraphs and the footnote are appended below.

The ruling on the “mandatory” issue is no longer simply a theory held by Prof. Ariel Katz, Prof. David Lametti and me, who made the successful argument in the SCC.* It is now the law of the land.

As noted below, some naysayers have argued and can be expected to continue to argue that the ruling that tariffs are not “mandatory” is restricted to the particular so-called but misnamed “arbitration” context of the CBC v. SODRAC case. However, in my view, they would be very wrong and very short sighted. The bottom line is that Copyright Board of Canada tariffs are simply not de jure (legally) mandatory or binding on users. Admittedly, some such tariffs may be de facto mandatory for practical purposes because there is no other better and cheaper way to achieve copyright compliance. For example, radio and TV stations that don’t want to restrict themselves to Bach, Mozart and other public domain music may have no practical choice other than to deal with SOCAN.  SOCAN, for its part, has a virtually complete repertoire of all the music needed by radio and TV stations that is not in the public domain. Access Copyright, on the other hand, has a very limited repertoire in terms of what is needed by educational institutions and governments, who have many alternative ways and sources to clear their copyright needs.

For those not familiar with or interested in the technical details of our argument in our SCC factum, consider this simple layperson’s analogy. In the old days, there were “tariffs” for passenger travel on railroads. Such tariffs would set a maximum cost of, say $10, to travel from Ottawa to Toronto and required that CN Rail run four trains every day and stop in certain places, or whatever, etc. But such tariffs did not require the passenger to buy a Canada-wide all year pass for $3,000 if they only needed to travel to Toronto or Montreal or Smith’s Falls a few times each year. And above all, such tariffs did not prevent any passenger from using a plane, car, a Greyhound bus or even a bicycle to get there from here. That is how “tariffs” work. In return for some degree of privilege from the government, the regulated party providing the service and seeking to be paid must submit to upper limits on what can be charged and accept other terms and conditions, such as the nature and quality of services that must be offered. Moreover, except in very rare examples such as a sole bridge crossing with no practical alternatives, there are usually competitive substitutes available.

Naturally, certain collectives and their lawyers and lobbyists can be expected to adopt the same tactics that were deployed for over a decade after the landmark 2004 CCH v. LSUC case – which might be called “Deny, Delay and Decry”.  For example, certain collectives tried hard in 2011 in some of the Pentalogy cases to get the court to effectively reverse its landmark CCH v. LSUC ruling from just seven years previously. The attempt not only didn’t work but clearly backfired.

Indeed, just two weeks after the March 16, 2015 hearing at the SCC in CBC v. SODRAC, one of Canada’s best known and most active copyright litigators and lobbyists, Barry Sookman, was quoted in the Wire Report on March 30, 2016 in a pay-walled article entitled “Should copyright tariffs be mandatory?” as follows:

Barry Sookman, a lawyer with McCarthy T├ętrault LLP who is representing Music Canada as an intervener in the Supreme Court case involving CBC and SODRAC, said the argument put forth by Knopf and CIPP "doesn't have a shred of credibility to it."

In a phone interview, Sookman said: "The Copyright Act is pretty clear that when the board goes through the process and it sets the rate, if you make a use that's within the [sic] what the board sets, you have to pay it."

The example of universities potentially being subject to a hefty tariff regime as a result of accidental usage of certain materials is "greatly exaggerated," Sookman said. He said the Copyright Board has the flexibility to "say if you do X, you have to pay, or it can set a tariff based on how much you do X."

It would seem that the SCC came to a rather different conclusion than Mr. Sookman, and that, after all, it is Mr. Sookman’s views on this issue that may not have a “shred of credibility”.  After the decision came out, he asserted quite perfunctorily and unconvincingly in his blog that:

Pursuant to Section 70.4, after the terms of a license are fixed under Section 70.2, the user retains the ability to accept or decline those terms. This decision was premised on the wording of Section 70.4 which was interpreted to give the user an election whether to accept or reject the license. Section 68.2(1) of the Act which addresses the effect of fixing tariffs certified by the Board in various other contexts and which gives collectives the right to collect royalties under an approved tariff was not considered by the Court.

In fact, s. 68.2 was specifically referred to twice in our SCC factum. It was clearly before the Court.

The only opposition to our argument during the actual SCC hearing arose in response to a direct question from Justice Rothtsein to Casey Chisick, who responded  presumably on behalf of his client of the day, the music collective CMRRA:

MR. JUSTICE ROTHSTEIN: May I just -- in your last few seconds -- Mr. Knopf argued about the jurisdiction of the Board in imposing a licence on the user. Do you agree with his argument about the Board didn't have the jurisdiction to do that or how would you approach that?

MR. CHISICK: Certainly not, Justice Rothstein. I disagree with that submission entirely. I think that it's founded on a misunderstanding of s. 70.4 of the Copyright Act, in particular, and the question of what exactly is voluntary versus what is mandatory. It's certainly clear that a user who doesn't make use of a repertoire has no obligation to pay for it. But it makes simply no sense in policy or according to the statutory scheme that a user who participates in a process before the Copyright Board those results in the setting of an arbitrated licence should then be able to walk away and say: No, thank you. I prefer not to pay for that. I'll just continue to make those copies and run the risk of being sued. It undermines the entire statutory scheme and renders it superfluous, in my submission.

The Court clearly rejected Mr. Chisick’s submission.

So, it would appear that,  if a party to a so-called “arbitration” – which really wasn’t an “arbitration” in any normal or legal sense of the word – can treat the Board’s ruling as non-mandatory, then a fortiori, parties who are not involved in the “arbitration” mechanism and who are supposedly affected by the “general regime” and who may make a single copy of a single work in the limited repertoire of a  collective in circumstances that may amount to technical infringement  should not suddenly be liable for many millions of dollars for that one copy. For a university, that liability could amount to millions of dollars retroactively for several years – a possibility of which the SCC was clearly aware, if you read our factum and watch the hearing or read the transcript. That’s simply a ridiculous possibility – but it’s what some collectives and their lawyers, lobbyists or spokespersons want users and their often overly risk averse advisors to believe is still possible. Which brings me to the present and the future.

The Follow Up and the Future

Clearly, as with any SCC decision, we look to see the follow up and the future. The potential follow up and future are both potentially imminent in two pending matters. The first is the Post-Secondary tariff, which I have recently written about. That hearing concluded on January 22, 2016 but important comments were received afterwards on the mandatory tariff issue from UBC, U of T and other universities. York University put in a long comment but only indirectly and obliquely mentioned the mandatory tariff issue. See my blog.

As for timing, the Copyright Board has, in the past, regularly taken two years or so after a hearing to render its decisions, which is virtually unheard of in other tribunals or courts in Canada. Hopefully, now that there is a new Chair in place and the issue of inexplicable delays in rendering decisions is now frontally in the public view as I have documented, we will have a decision in a matter of weeks or months (the norm is less than six months] and not years. Indeed, a decision in advance of the AC v. York U. trial beginning on May, 2016 could be potentially very useful in that context. Moreover, the SCC has clearly sent out a signal about retroactively binding decisions. Thus, the decision will hopefully come sooner rather than later.

The next – and even more important – test will be in the Access Copyright v. York University litigation, which I’ve also had much to say about, for example here. That litigation is based upon the Copyright Board’s controversial Christmas Eve interim tariff of 2010, which the AUCC (now Universities Canada) took no steps to challenge on judicial review – although there arguably were ample grounds, as I explicitly suggested at the time. An application for judicial review of the interim tariff, had it been brought in January of 2010, might have precluded the very possibility of the current litigation against York University.  And, as events have now shown, it might very well have succeeded at a very small fraction of the cost of the AC v. York U litigation, which will cost York and contributing institutions “hundreds of thousands of dollars, if not a million”, according to York GC Maureen Armstrong in an interview reported on December 29, 2015.

York University is being represented in the AC litigation by the same firm that acted for AUCC during the Copyright Board Post-Secondary hearing, from which AUCC withdrew after having spent $1.7 million, as I have noted before. The firm is indeed extremely well experienced in copyright matters, having long acted for Re:Sound, one of the most important music collectives in Canada, the plaintiff law publishers in the CCH v. LSUC case, other major content owner interests. The firm took different positions on fair dealing at the Copyright Board in the Post-Secondary case and in the SCC in the SOCAN v. Bell cases as noted by Prof. Sam Trosow. Nothing I say here should be taken as critical of York’s law firm.

Nonetheless, with no criticism intended, certain questions relevant to the public interest have arisen or may be asked as the three week AC v. York U trial set to start on May 16, 2016 looms. There are three clear overall questions that may be asked:
  • What impact will the “mandatory tariff” ruling of the SCC in CBC v. SODRAC have on this litigation? Will this be presented as a threshold and fundamental issue at the trial?
  • Is it still necessary for the Court to consider the apparently vast amount of evidence, including expert evidence, gathered in this case, to rule on York’s fair dealing guidelines, and to treat this as, in effect, a huge infringement action? It may be noted that AC lacks the legal standing to sue for copyright infringement as such, unless it joins the actual copyright owners – something that could raise all kinds of potential legal and political concerns.
  • What will happen if York loses on the “mandatory tariff” issue, or another key issue such as fair dealing? Will it then appeal, thereby allowing potential interveners the opportunity to become involved, if the Court so permits?

 There are bound to be other questions arising before, during and after the trial – which starts on May 16, 2016 in Toronto. This has clearly been - and will be – a major event for both AC and York U, and of course all of the interested stakeholders.  The time may be inappropriate at the moment but questions have arisen or may arise again in the future concerning issues such as:
  • Was there an earlier opportunity to get a ruling on whether the case could or should go forward, if the “interim tariff” is not “mandatory”? If so, why has York taken no steps to date for a summary disposition of this litigation based upon the proposition – now a ruling of the SCC - that Copyright Board tariffs, and a fortiori, interim Copyright Board tariffs, cannot be “mandatory”?  While the SCC ruled on this issue on November 26, 2015, the issue has been known about and written about for many years and before this litigation was commenced on March 8, 2013?. Prof. Ariel Katz laid out the gist of the argument quite publicly back in 2012 and tried, without success, to get the Copyright Board to deal with it in the Post-Secondary hearing. I have been writing about this innumerable times beginning even in December 2010 before the Board announced the interim tariff that is the basis of the current litigation and which AUCC did nothing to attempt to overturn on judicial review. I have long ago raised the question of whether it might have been possible to attack the pleadings at the outset on this issue.
  • Could the York lawsuit have been entirely prevented if AUCC had sought timely judicial review back in January of 2011, as I explicitly suggested at the time, when such review would have been inexpensive and stood a good chance of success?
  • While York has raised the issue of whether the “interim tariff” is mandatory, what is its position on a final certified tariff? The pleadings are silent on this point.
  • Was it inevitable that York’s fair dealing guidelines go on trial? If so, will York be able to benefit from the Copyright Board’s extensive reasoning on fair dealing in the Provinces and K-12 decisions?
  • Was it inevitable that experts, surveys, and other massive amounts of evidence be dealt with at the first phase of a bifurcated hearing if tariffs are not mandatory?
  • Was it necessary for York to submit to such massive discovery, which has led to prolonged, extensive, and expensive proceedings that has threatened to be disruptive to a large community at York and even led to a policy grievance by the faculty association arising from a “Document Preservation Notice” sent by York’s former General Counsel to YUFA members? 
There was an interesting discussion on February 25, 2016 about the “Mandatory Tariff” theory and some of the above issues at York University at the Osgoode Hall/U of T “UNPACK SOCRAC” conference on February 25, 2016. Unfortunately, as I understand, the organizers of the conference were unable, for whatever reason, to persuade any official of any collective or any of their outside counsel to participate on this panel. 

Here are the slides for this panel, including mine.  You see here a wonderful “doodle” of the event by the incomparable Diva of Doodlers, @GiuliaForsythe. As usual, she captures the essence with skill, wit and insight:



HPK

____________________________

The Ruling of the Supreme Court of Canada on Mandatory Tariffs


(2)  The Board May Not Compel a User to Agree to the Terms of a Licence Against the Will of the User

(101)      CBC argues that, while the Board may fix the royalties to be paid under the statutory licensing procedure created by s. 70.2 of the Copyright Act, the Board may not set the other terms or structure of that licence. Specifically, CBC takes issue with the Board’s decision to impose an interim licence on a blanket basis, such that CBC pays for access to the entire SODRAC repertoire, rather than on CBC’s preferred transactional basis, whereby CBC would pay only whenever it actually used a work from the SODRAC repertoire. A blanket licence grants access to SODRAC’s entire repertoire for its duration, and thus reduces CBC’s ability to control its licensing costs. Under a transactional licence, by contrast, CBC may choose in any given situation whether it wishes to licence a particular work or forego making use of SODRAC music. CBC argues that if the collective organization and the user disagree over the model a licence is to take — blanket or transactional — the Board lacks the power to compel the execution of a licence.
(102)      SODRAC counters that the Board has the power to issue licences in either blanket or transactional form, and should have this power in all proceedings under s. 70.2. To hold otherwise, it argues, would be “to make the Board’s remedial jurisdiction under section 70.2 dependent upon the consent of a user, [and] would be at odds with its mandate to resolve disputes”: R.F., at para. 133.
(103)      Though CBC first raised this issue in the context of the Board’s Interim Licence Decision, the dispute relates generally to the Board’s power to structure licences, whether interim or not: Does the Board’s power to set the terms of a licence include the power to bind the parties to those terms?
(104)      I do not read the Copyright Act to necessitate that decisions made pursuant to the Board’s licence-setting proceedings under s. 70.2 have a binding effect against users. Section 70.2 itself provides that where a collective organization and a user cannot agree on the terms of a licence, either party may apply to the Board to “fix the royalties and their related terms and conditions”: Copyright Act, s. 70.2(1). This grant of power speaks of the Board’s authority to set down in writing a set of terms that, in its opinion, represent a fair deal to licence the use of the works at issue. It says nothing, however, about whether these terms are to be binding against the user.
(105)      The statutory context supports the conclusion that licences crafted pursuant to s. 70.2 proceedings are not automatically binding on users. Section 70.4 of the Act provides:
70.4 Where any royalties are fixed for a period pursuant to subsection 70.2(2), the person concerned may, during the period, subject to the related terms and conditions fixed by the Board and to the terms and conditions set out in the scheme and on paying or offering to pay the royalties, do the act with respect to which the royalties and their related terms and conditions are fixed and the collective society may, without prejudice to any other remedies available to it, collect the royalties or, in default of their payment, recover them in a court of competent jurisdiction.
(106)      This provision makes it clear that a user whose copying activities were the subject of a s. 70.2 proceeding may avail itself of the terms and conditions established by the Board as a way to gain authorization to engage in the activity contemplated in the Board proceeding. The language of s. 70.4 does not, of its own force, bind the user to the terms and conditions of the licence.
(107)      The conclusion that Board licences established pursuant to s. 70.2 are not binding on users comports with the more general legal principle that “no pecuniary burden can be imposed upon the subjects of this country, by whatever name it may be called, whether tax, due, rate or toll, except upon clear and distinct legal authority”: Gosling v. Veley (1850), 12 Q.B. 328, 116 E.R. 891, at p. 407, as approved and adopted in Ontario English Catholic Teachers’ Assn. v. Ontario (Attorney General), 2001 SCC 15, [2001] 1 S.C.R. 470, at para. 77, and Attorney-General v. Wilts United Dairies, Ltd. (1921), 37 T.L.R. 884 (C.A.), at p. 885. To bind a user to a licence would be to make it liable according to its terms and conditions should it engage in the covered activity. In the absence of clear and distinct legal authority showing that this was Parliament’s intent, the burdens of a licence should not be imposed on a user who does not consent to be bound by its terms.
(108)      SODRAC’s framing of the issue is not entirely wrong: the Board does have the power under s. 70.2 to “fix the royalties and their related terms and conditions”. That is, the Board may decide upon a fair royalty to be paid should the user decide to engage in the activity at issue under the terms of a licence. However, this power does not contain within it the power to force these terms on a user who, having reviewed the terms, decided that engaging in licensed copying is not the way to proceed. Of course, should the user then engage in unauthorized copying regardless, it will remain liable for infringement. But it will not be liable as a licensee unless it affirmatively assumes the benefits and burdens of the licence.
(109)      The matter is complicated considerably by the fact that the Board’s statutory licence decisions have, in recent years, taken on an increasingly retroactive character. CBC’s statutory licence in this case provides an example: the licence covers the period from November 2008 to March 2012, but the Board’s final decision was issued on November 2, 2012, after the term of the licence had expired. In situations like these, the Board may issue interim licences that seek to fill the legal vacuum before the final decision is ready, but this leaves a user to operate based on assumptions about how their ultimate liability for actions taken during the interim period will be evaluated.
(110)      Should a user engage in copying activity under an interim licence, and then find itself presented with a final licence whose terms it would not voluntarily assume, the user is left in a difficult position: accept the terms of an undesirable licence, or decline the licence and retroactively delegitimize the covered activity engaged in during the interim period, risking an infringement suit. This dilemma may mean that a user who operates under an interim licence has no realistic choice but to assume the terms of the final licence.
(111)      While I find this possibility troubling, I do not find that this result would detract from the more general proposition that there is no legal basis on which to hold users to the terms of a licence without their assent. The licence is not de jure binding against users, even if the particulars of a specific proceeding, and a user’s decision to engage in covered activity during an interim period, may mean that the user does not de facto have a realistic choice to decline the licence.[2]
(112)      I conclude that the statutory licensing scheme does not contemplate that licences fixed by the Board pursuant to s. 70.2 should have a mandatory binding effect against users. However, this case does not require this Court to decide whether the same is true of collective organizations. It may be that the statutory scheme’s focus on regulating the actions of collective organizations, and the case law’s focus on ensuring that such organizations do not devolve into “instruments of oppression and extortion” (Vigneux v. Canadian Performing Right Society Ltd., [1943] S.C.R. 348, at p. 356, per Duff J., quoting Hanfstaengl v. Empire Palace, [1894] 3 Ch. 109, at p. 128) would justify finding that the Board does have the power to bind collective organizations to a licence based on the user’s preferred model — transactional or blanket — on terms that the Board finds fair in view of that model. However, this issue was not argued in this case.
(113)        I find that licences fixed by the Board do not have mandatory binding force over a user; the Board has the statutory authority to fix the terms of licences pursuant to s. 70.2, but a user retains the ability to decide whether to become a licensee and operate pursuant to that licence, or to decline.
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[2]  During the hearing before this Court, counsel for the interveners the Centre for Intellectual Property Policy and Ariel Katz briefly raised concerns regarding the Board’s power to issue retroactively binding decisions in general. That issue was not squarely before this Court in this case, and I do not purport to decide broader questions concerning the legitimacy of or limits on the Board’s power to issue retroactive decisions here.

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* I was honoured to represent at the SCC the Interveners Prof. Ariel Katz and the Centre for Intellectual Property Policy (then under the direction of Prof. David Lametti, who is now David Lametti, M.P. and Parliamentary Secretary to the Minister of International Trade). It was our submissions that persuaded the Court on the above issues and which are reflected in Justice Rothstein’s reasons. Here’s our factum. Here’s the video of the oral argument, wherein our submissions on the mandatory tariff begin at the 152 mark and consisted mostly of an interesting interchange between me and Justice Rothstein that presaged the eventual ruling. Our submissions on the retroactivity issue in response to a question from Justice Karakatsanis begin at 163 and took us into overtime. Once again, the interchange presaged the result.