Thursday, June 25, 2020

Copyright Board Activity in 2020: Launch of Twitter Account and Guidelines for Economic Evidence


More than a year after the Copyright Board announced with great fanfare that it would launch a Twitter account and received an additional $1,000,000 in its budget, the account has now launched on June 12. 2020.  Here it is. @COP_eng . In its first ten days, it has so far 14 followers – two of whom are me and Prof. Ariel Katz @Relkatz and at least two of whom are Copyright Board staff.

Its only announcement to date is that the Board has now issued “Guidelines for economic evidence submitted to the Copyright Board of Canada”.  Indeed, this is the only evident sign on the Board’s website of any activity by the Board in 2020 other than the Twitter account launch, and the usual COVID notice. It would seem  rather difficult to see where any of the million dollars has been spent. The “revamped” website has not been launched. None of the three dozen or so presumably routine but possibly interesting notices and rulings that have apparently been issued in 2020 have yet been posted online. Back on November 28, 2019, I reported that the Board has spent $757,548.50 on website stuff since April 1, 2018. No progress is evidence. If anything, the website has become even less useful – for example by eliminating the names and contact information for all its professional staff other than its Secretary General.

Also, it’s a mystery as to who, if anyone, is currently the Chair of the Copyright Board. As of now, according to the Governor in Council appointments website,  the position seems to be vacant. The appointment of Justice Robert Blair expired on May 27, 2020 and there is no indication at this time that his appointment has been renewed or that he has been replaced. He is still shown on the Board’s website, but the Board’s website seems to have been largely untouched for several months despite the massive amounts of money spent on it. The Governor in Council website is likely more definitive.

In any event, there are some good common-sense points in these new Guidelines.  Economic evidence can be useful in rate setting. That goes without saying.

However, the concept of a “willing buyer” and a “willing seller” is very problematic in a market where one party is given potentially very powerful statutory monopoly power and the potential licensees either don’t wish to or don’t need to deal with the collective in question. However, assuming, as is likely, that the recent FCA ruling that Copyright Board tariffs are not mandatory stands, then some viable meaning to these concepts may actually be restored if – and this is a very big “if”  both collectives and  the Board appreciate that tariffs must offer good and attractive value if they are to translate into licenses between a collective and a willing licensee.

The most recent Access Copyright post-secondary tariff decision in which the Board improvidently adopted the so-called “freely negotiated” AUCC model license and Access Copyright’s “Premium” licence as valid proxies after nearly 10 years of mostly unopposed proceedings is absolutely NOT such an example. The  Board’s reasoning is very unconvincing. The Board regarded institutions that did not sign on to the AUCC Model licence or Access Copyright’s Premium license as having “left the market”.  That, of course, is absurd. Those institutions were spending millions clearing their copyright needs in other ways, such as expensive site licences and reliance on several Supreme Court of Canada fair dealing decisions. On January 22, 2020, I commented on the timing of the Board’s decision that was almost a decade in the making and extremely retroactive – and that for one reason or another nobody could be bothered to even attempt to seek judicial review. And that was three months before the landmark ruling in Access Copyright v. York that Access Copyright’s tariffs aren’t mandatory.

Moreover, a perennial problem is that many Copyright Board cases – especially those involving new or “inaugural” tariffs – start out with  no “evidence” as such and are merely based on guesswork and may not get much better as time goes by. Readers may recall that that, in 2002, the Canadian music industry was seeking a “tax” (as it was commonly called) of $21 per GB on the memory in iPods and other devices. If that had somehow been approved and had remained in place, that “tax” on an 8 Terabyte external hard drive that now sells for about $200 would be $168,000.00 – and that is not a misprint. The point is that the music industry was simply pulling a number out of the air with absolutely no evidence or rationale to back it up. It was not much better when Access Copyright started out by demanding $45 per FTE student – with no apparent basis for that number – in its proposed post-secondary tariff.

If the Board’s Guidelines succeed in injecting some rigor into the front end of these proceedings, much time and expense could be saved. However, it’s ironic that for an organization presumably now very acutely aware of the meaning of the word “mandatory”, these Guidelines are explicitly “not mandatory”. Indeed, more may be needed in the form of explicit regulations that require something analogous to a “pleading” or “statement of claim” where “a concise statement of the material facts” to be relied upon are set out at the outset. See Federal Courts Rules Rule 174.

The additional clarity on the Guidelines is helpful in some respects. However, the several references to “intervals” and “interval methodology” inject what many will perceive as unfamiliar terminology. This may cause some confusion. Whether this is new terminology for old economic or statistical methods or indeed actually some kind of new “methodology” may need clarification.

I don’t know whether the Board looked at the Competition Tribunal, which is a far more productive organization with a now much smaller budget than the Board and a far greater case load that often involves very complex and important matters involving vast amounts of money. Here are the rules that govern the use of evidence and expert evidence in that tribunal. Of particular interest is Rule 80 that provides:
 (1) The Tribunal may, at any time, by order appoint one or more independent experts to inquire into and report on any question of fact or opinion relevant to an issue in a proceeding.

The Copyright Board Guidelines do not address the elephant in the room here, which is the use and sometimes the apparent misuse of so-called expert evidence that can happen at the Board. Although the Board has more leeway than a normal court when it comes to such things, there are certain basic laws of gravity that apply. These are set out in a famous Supreme Court of Canada case, namely R. v. Mohan, 1994 CanLII 80 (SCC), [1994] 2 SCR 9, <http://canlii.ca/t/1frt1>. The application of Mohan in the context of admirative tribunals has recently been recently exhaustively considered by the Competition Tribunal – once again the most useful comparative model for the Copyright Board. See The Commissioner of Competition v Vancouver Airport Authority, 2019 CACT 6 (CanLII), <http://canlii.ca/t/j36c1>, which deals at length with such issues as the necessity, reliability and independence of the “expert” evidence, as well as the perennial issue of “hearsay” evidence.

The paradox at the Board is that, even with the relaxed rules of evidence compared to a normal court  that it is allowed (with the approval of the FCA per Pelletier, J.A. in Canadian Recording Industry Association v. Society of Composers, Authors and Music Publishers of Canada, 2010 FCA 322 (CanLII), <http://canlii.ca/t/2dsw7>, things take exponentially longer and incur exponentially higher costs that one would normally see in a normal court.

Notwithstanding the above and the slight signs of progress, I feel  compelled to reiterate my concern that I voiced a year or so ago, about the supposedly “new” concepts of “public interest”, “willing buyer”, and “willing seller” which are  referred to in the Guidelines and which some parties with too much resources may exploit to wear down parties with too little resources. The Board’s Guidelines do little to allay my concerns. This is what I said about this over about a  year ago:

Ms.  Th├ęberge [the Vice Chair of the Copyright Board, who is not a lawyer] spent a lot of time pointing out that, as of April 1, 2019 the new “public interest” requirement for tariffs came into effect. Here is the provision:
Fair and equitable
66.501 The Board shall fix royalty and levy rates and any related terms and conditions under this Act that are fair and equitable, in consideration of
(a) what would have been agreed upon between a willing buyer and a willing seller acting in a competitive market with all relevant information, at arm’s length and free of external constraints;
(b) the public interest;
(c) any regulation made under subsection 66.91(1); and
(d) any other criterion that the Board considers appropriate.
2018, c. 27, s. 292 (highlight added)
This was introduced in the very unfortunate Bill C-86 omnibus bill that received only a token amount of debate and public comment. I said at the time in a blog that was very critical of the Governments use of omnibus legislation in this way that:
·       Will the imposition of explicit criteria re “competitive market” and “public interest” cause more mischief, costs and need for protracted and expensive evidence from so-called experts? The Board has purported to be concerned with the public interest all along – so do we really need to etch this into stone, whatever it may mean? Even John Degen agreed with me that this was cause for concern – thought for difference reasons. But the fact that Mr. Degen and I agreed on something should tell you something.
Neither of these concepts – the “public interest” and “competitive market” –  are new. They are embedded in existing jurisprudence, especially that of the “public interest”. That the Board should now consider that it suddenly has an obligation to decide cases “in the public interest” is astonishing. What else has it and its predecessor been doing for more than 80 years? Is the Board unaware of Supreme Court of Canada jurisprudence going back almost 8 decades? While some consultants are doubtless salivating at the prospect of providing lucrative so-called “expert” evidence on these issues that will result in protracted and much more expensive hearings, this should not be necessary if the Board simply follows longstanding case law and takes responsibility for deciding the ultimate legal questions itself rather than relying upon so-called experts, who are often repeat performers and rarely truly independent when it comes to Copyright Board proceedings.
Indeed, Justice Blair himself made a half dozen references to the “public interest” in his published remarks from over a year ago. Why this is suddenly now an apparent new mandate for the Board is astonishing and should be very puzzling to those who know Canadian copyright jurisprudence.
However, suppose that Bill C-86 actually did somehow enact something new (likely unlikely) in this respect and could be invoked to call for a new approach. It would be nice if this supposedly new “public interest” provision would be invoked to enable the Board to retain truly neutral and credible advice in the person of amicus curiae or “assessors” in appropriate circumstances but there was no suggestion to that effect. Moreover, when the Board is indecisive even about deciding such a basic issues as whether a person engaged in case management should be on the presiding panel (which should be avoided at all costs, as is the case in the Federal Court as every experienced Federal Court lawyer knows well), it’s hard to imagine how the Board would be thinking about bringing in the concept of amicus curiae or “assessors” – which would be admittedly unusual but arguably within the realm of the possible and advisable. Besides, if the thought were ever to occur to the Board, it would no doubt want a very large budget increase to look into this and to fund such activity. Anyway, it’s probably a non-starter of a suggestion, since there are very few if any people in Canada who are sufficiently expert lawyers or economists to fulfill this role and who would not already have too much baggage to carry and still be perceived as credible to all concerned.
So, I expect that my fear – shared by others – that this gratuitous statutory  references to the “public interest” and a “competitive market” will become an excuse for even longer delays appears to be coming true. I hope that I am wrong. However, given the Board’s propensity for making very simple things very complicated (e.g. “ordinarily used”, “making available”, etc.), I cannot be optimistic.
(highlight added)

HPK





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