Thursday, October 16, 2008

Audting Access Copyright?

As I mentioned yesterday, the League of Canadian Poets is on the case about Access Copyright, a collective that has over $37 million in most recently reported revenues, almost all of which comes from taxpayers. The distribution mechanism to actual creators has been severely criticized. The League of Canadian Poets is apparently asking for Canadian Heritage to audit Access Copyright.

It might be noted that Access Copyright had reported expenses of over $7 million in its most recent reported year and reports expenditures in 2006 and 2007 of almost $2.5 million for “Copyright Board filings.”

Offhand, I don’t see where Canadian Heritage would have any legal authority to “audit” Access Copyright. That said, the Federal Government has been an early and enthusiastic licensee of Access Copyright, and its early willingness to pay very substantial licensing fees helped get Access Copyright - then known as CanCopy - up and running. The Federal Government currently should arguably be paying much less to Access Copyright than in the past because the Supreme Court of Canada has ruled that “research” can be fair dealing and it would seem obvious that much if not most of the reprography that goes on inside Government would be for research purposes. It is not known whether the Feds have played hardball on this issue, or whether they continue to give millions to Access Copyright with little questioning as to why. Unfortunately, Access Copyright has abandoned its practice of more granular reporting of its licensing income that would provide more information as to the type of license and licensee, i.e. how much derives from schools, post secondary, public sector and corporate.

The point is that there is no reason why the major licensees of Access Copyright, such as the Federal Government, the universities, and the K-12 schools could not demand more transparency, along the lines set forth by Prof. Martin Friedland. There is no reason why these groups couldn’t insist upon an annual published audit that deals with specified parameters. I don’t mean the pro-forma type of statements that simply vouch for the annual published financial statements, which disclose very little.

Moreover, I have argued that the Copyright Board arguably could - if it chose to do so - exercise far greater oversight in situations such as this. This is what I have said in a recent paper, just published in the Intellectual Property Journal and available in essentially the same version here:

Oversight of Collectives

It is arguable the Board has sufficient powers under current legislation and in view of the cases mentioned above and many more to exercise more power of oversight over the internal workings of collectives. This could include:

• distribution mechanisms

• review of administration costs

• transparency and reporting of key financial information, including management, legal and

other professional expenses.

There is little point in imposing tariffs that are high by any standard, and in some cases relatively higher than in countries such as the USA, when the funds are often distributed years late and in a mystical manner and method, if indeed there is any adequate method. Such a tariff may not have the appearance of being “fair and equitable.”

It is an insufficient answer to rely on member democracy and accountability, since there is very little of this in the corporate governance of many of Canada’s collectives. Even the provision of a requirement of minimum transparency would serve to enable at least the chance for assertion of members’ rights and better governance.

The Board arguably could and should scrutinize the expenditures and efficiency of collectives.
Collectives exist not to reward their staff, consultants and lawyers but to collect and to distribute the royalties earned and deserved by their members. If Parliament is going to empower these collectives with monopoly rights, there needs to be sufficient accountability. This is an area where the Board could potentially regulate to some degree. If the Board believes it lacks jurisdiction to do so, then the Governor in Council or Parliament should do what is required.

To the Board’s credit, it has on occasion told collectives to take better care of certain classes of members. For example, in 1994 it told SOCAN that the proposed concert tariff was too low to be in the interests of its members:
The Board hopes, however, that SOCAN will give due consideration to filing its
proposed concert tariff for 1995 at a rate higher than that in the SOCAN/CAMP
agreement. The Board is of the view that unless this course is followed, the
interests of SOCAN's members will not be properly served.
Recently, the Board looked out for the interests of the independent members of the Canadian
Recording Industry Association (“CRIA”) and was decisively upheld by the FCA in brief reasons delivered from the bench.

Other thoughts will follow on this and related subjects. There is little point in Canada having the most copyright collectives of any country and the largest and best resourced copyright tribunal if the system does not do a commensurately good job for creators, users, and, to the extent necessary, others with legitimate economic interests based upon copyright. There are some changes and improvements that need to be made.


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