It would appear that AC has just unilaterally re-written some basic aspects of copyright and competition law, not to mention basic economics. It’s an extraordinary statement, presumably in response to Michael and my recent posts and AUCC’s letter to the Copyright Board.
AC says that:
The application of any mechanism designed to encourage and facilitate respect for copyright has to make sense, or nobody will use it. The enormous investment the Canada Revenue Agency has made to facilitate tax filing is all about ensuring compliance by making it easy. The assumption is always that most people will do the right thing if you don’t put impediments in their way. The same holds true with licensing.
Transactional licences for secondary uses of works are often not suited to the demands of the new digital economy. Impractical to implement and costly to administer, they have the added weakness of being unable to capture uses that should be compensated. They do not ensure that all secondary uses are legal, on the contrary, their very impracticality is an incentive to infringe.
A comprehensive licence, on the other hand, is a fast, easy and cost-efficient way to clear copyright protected works. It ensures that uses of works are cleared and tracked in a consistent and structured way. As always, publishers also have the option to clear the rights themselves directly with educational institutions, in accordance with their individual business interests.(Emphasis added)
First, the reference to “The enormous investment the Canada Revenue Agency has made to facilitate tax filing ...” is ironic at several levels. It’s true that many regard AC as a tax collector. The only problem is that it is a self-appointed tax collector and, unlike CRA, its systems largely don’t work. If nothing else, this is an interesting admission.
The AC declaration makes no legal or economic sense. It ignores fundamental legal, economic and antitrust axioms:
1. IP owners have exclusive rights, which are normally dealt with in transactions with users. Doing something without permission for which permission is required entails infringement. Transactions may be virtually automatic, such as the sale of a book or a CD. Or they may be highly complex and intensely negotiated, such making a feature film. But their essence is that they are individual transactions. If I go into CD Warehouse or online to iTunes to buy Leonard Cohen’s latest album, I will not be forced to buy the entire store or online catalogue in order to buy one album.
2. Collective exercise of these rights is inherently anticompetitive and virtually all sophisticated countries provide oversight mechanisms to ensure that collectives do not abuse the extraordinarily anticompetitive and in many cases even monopolistic power exceptionally allowed to them. Collectives are an exception to the normal principles of antitrust law, which may be more tolerant than it once was about IP misuse and abuse. However, today’s declaration may provoke reaction from the watchdogs who have been waiting to push back the antitrust pendulum in respect of IP in Canada.
3. One of the first thing every law student learns is “nemo dat quod non habet” - you can’t give what you don’t have. It’s difficult to imagine how AC could have any chain of title to a vast amount of the “repertoire” needed in any university. And much of what is now used is already paid for through licenses or doesn’t require payment - i.e. is fair dealing or is in the public domain. AC has been unable or unwilling to provide evidence of its actual repertoire to date. Given all of this, it’s particularly astonishing for it to insist that universities either pay for it all (whatever “all” may be) or get nothing. To the limited extent that “blanket licenses” are legally and economically justifiable in Canada, there must be a large enough actual repertoire to justify such licenses. We don’t have “extended collective licensing” in Canada, no matter how much AC may wish that it were so.
“Respect for copyright” should entail behavior consistent with basic legal and logical principles and norms. Collectives, too, are bound by copyright law. Users, too, have copyright rights.
AC has just effectively filed a declaration of independence from such ground rules in stirring language , viz:
Transactional licences - licences issued on a pay-per-use basis - were more effective as a business model for secondary uses of published works when paper ruled the world of publishing and copying. Transactional licences were a practical alternative when copying was centralized and compliance was easily monitored. This is no longer the case.(emphasis added)
This astonishing declaration - and indeed confession and admission - cries out for appropriate action. All eyes now on the institutional objectors and the Copyright Board to see what’s next.
Here’s a hint of what may be worth considering. In view of these recent developments concerning transactional licenses and the lack thereof, and the two pending cases for which leave has been granted in the Supreme Court of Canada that go to the root of fair dealing, should thought be given to a stay of the Copyright Board hearings?
And, BTW, AC’s refusal to issue transactional licenses could be a very interesting and important issue in any litigation involving material for which a request for transactional license has been refused. My understanding is that many publishers are referring such requests to AC, which then refuses to deal, as the Competition Act so nicely puts it.
I should remind readers that, apart from suing small corner mom & pop type copy shops, AC’s copyright litigation record shows no victories of which I am aware against any institution, individual or large established corporate defendant in Canada. It has just made its odds of success in any infringement action connected with an academic environment even lower than before.