Monday, July 18, 2011

Access Copyright Responds to Motion and Submissions re Alleged Refusal to Provide Transactional Licenses

Access Copyright ("AC") has filed a lengthy submissions regarding AUCC's motion concerning the alleged refusal to provide transactional licenses.

Here's the public version of the submission and the public Appendix.

The existence of confidential material here certainly whets the appetite and makes one wonder why this material can be regarded as confidential. 

In a nutshell, AC denies that it ever issued transactional licenses before that would fall within the scope of  the post secondary licenses (i.e. one chapter, 10% of a work, etc.). That comes as a surprise to me - but let's see what the Board considers to be sufficient evidence on this point. Actual evidence of recent refusals was filed. AUCC and ACCC presumably have a chance tomorrow to file more evidence by way of reply, if they wish to do so. 

AC also denies all legal arguments and is apparently particularly  sensitive to the competition law points raised by Prof. Katz, which include refusal to deal, abuse of dominant position, and s. 45, which deals with potentially very serious offences.

One interesting aspect of AC’s argument involves the "refusal to deal" issue. AC relies on the arguably overly broad ruling in the 1997 decision Canada v. Warner Music, which held that Warner Records was not required to license its rival BMG to make records for inclusion in the catalogue of Warner’s mail order business that would then compete with the then very well known Columbia House record club, of which Warner was an equal partner with SONY. Indeed, BMG could obtain the Warner records it needed to fill out its catalogue at wholesale cost, but that was not good enough for BMG.

In that decision, the Competition Tribunal ruled that copyright licenses were not a “product” for purposes of the refusal to deal provisions in the Competition Act. That decision resulted from the Bureau's surprising decision take that case forward at all, and in turn to pursue the arguments that it did. Naturally, the Tribunal refused to let the case proceed - but arguably went farther than it needed to based upon unnecessary and frankly unfortunate arguments by the Bureau. Arguably, the Competition Tribunal reached the right decision but for the wrong reasons, which flowed from the then Director’s arguments. Naturally, nobody would argue that Ford should be forced to sell certain types of its car engines at its manufacturing cost to General Motors to make up for gaps in the latter’s engineering expertise or production facilities, or vice versa - assuming that these were the facts. However, that, in effect, was what the Director seemed to be arguing.

In any case, it would seem that the Warner decision is completely inapposite on the facts in this case.

AC's submission is lengthy - but its is a must read for both copyright and competition lawyers and especially for interested officials in the Competition Bureau, who may wonder whether the current proceeding is the right forum with the right evidence to deal with some rather important issues at the intersection of copyright and competition law

The other parties have until tomorrow - July 19, 2011 to respond to AC.

AC's submission is very heavy on competition law, which is interesting because AC submits that there are no competition law issues.

The Board has clearly indicated that it does not want to hear from the Commissioner of Competition until a much later time "such as once the evidence and arguments of the parties have been filed" at the least, in this case. It it will be interesting to see if the Commissioner should wish to become involved earlier. This may depend on how the Board rules on the current motion.

S. 125 of the Competition Act gives the Commissioner the power to "make representations to and call evidence before the board, commission or other tribunal in respect of competition, whenever such representations are, or evidence is, relevant to a matter before the board". This can be at the Commissioner's own initiative or at the direction of the Minister.


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