The Shrill Shrieking of Access Copyright and the Coming Copyright Confrontation

(Captain Copyright ~ 2006)

For the second time in recent weeks, the Globe Mail – supposedly Canada’s “newspaper of record” - has published highly misleading and embarrassingly over the top op eds from authors who really should know better, given their notable backgrounds. No doubt they mean well and aren’t beholden to Access Copyright – but their opinions are so over the top and poorly informed that they have a very bad look:

Kate Taylor, May 26, 2023

Hugh Stephens, July 15, 2023

Hugh Stephens’ opinion piece conveniently follows up just two days later on the announcement by Access Copyright (“AC”) that it was downsizing and restructuring.

And this, from the shrill Quill and Quire piece dated July 19, 2023.

First, let’s get some big misunderstandings (including what some might say are “big lies”, but I presume no deliberate intent to prevaricate or be mendacious) off the table. More detail follows below:

• AC does NOT collect for the mainstream of creators whose works are used in the Post Secondary Education (“PSE”) sector. It is believed to mainly represent authors of Canadian literature, which is a fringe area overall in the curricula of the PSE sector. AC’s actual repertoire remains something of an impenetrable black hole. Full disclosure – I’m a member and earn enough for one very modest lunch a year – which is more than some serious academic friends of mine.
• AC’s incompetence and inability to fairly distribute its revenues to its creators has been known and documented for a long time, most famously in the 2007 report by Martin Friedland, former Dean of U of T Law School. There is no apparent reason to believe that things have significantly improved since then.
• The decline in AC revenues over the last 11 years had NOTHING to do with the 2012 legislation that added the word “education” to s. 29 of the Copyright Act. The users’ fair dealing rights relied on by the PSE sector have been in place for more than a century since at least 1921 and have been affirmed and confirmed by countless judicial decisions, including four from the Supreme Court of Canada between 2004 and 2021, including the two of the 2012 “pentalogy” decisions and the 2021 York decision, that were not based the 2012 amendment.
• The basic right of “fair use” (American counterpart to fair dealing) has been hardwired into US law since 1976, i.e. “teaching (including multiple copies for classroom use), scholarship, or research”. See 17 USC 107. There is no imaginable reason for Canadian educators and students to be at a comparative disadvantage to their American counterparts, especially when American publishers are a driving force – maybe even the main driving force - behind AC.
• Since 2012, the Canadian PSE sector has been spending far more and far smarter on fair payment for authors by way of licenses of various kinds, acquisitions of print or digital material, and targeted procedures to ensure that deserving authors get paid. See this, for example, from CARL.  It’s just that AC is apparently the worst possible vehicle to ensure such payment. We don’t use a stagecoach anymore to get from Ottawa to Toronto – and there are no “mandatory tariffs” that require using one source or method of getting to there from here – especially via stagecoach.
• AC was born and nourished by a sweetheart deal with the Federal Treasury Board in 80’s. It has been protected since then by the Feds the Copyright Board – but any justification for such protection, if it ever existed, has long expired.
• The bottom line is that AC offers virtually no value at any price for its PSE licenses. And, of course, these “licences” are NOT MANDATORY.

Some History:

Once upon a time Access Copyright was known as CanCopy – until I and others inspired by former York University President Harry Arthurs - nicknamed it “Can’t Copy” – which was much more accurate.

My own blog is called Excess Copyright – a name inspired by Access Copyright.

Well, it seems that “excess” has not served Access Copyright (“AC”) very well. AC has excessively overreached with respect to:

• Demanding excessive FTE payments for PSE students
• Blaming the Conservative government for the 2012 (“Copyright Modernization Act” “CMA”) amendment that added the word “education” to the fair dealing purposes in the Copyright Act
• Blaming the Liberal Government for not undoing this innocuous amendment, which has not resulted in any extension of users’ fair dealing rights not already explicitly blessed by three Supreme Court of Canada (“SCC”) decisions based on the law prior to the CMA
• Purporting to have actual repertoire that is of any significance overall on the PSE system. AC’s actual repertoire – which is anything but transparent – is believed to consist mainly of Canadian literature. Such repertoire plays a minimal role in the PSE sector. Very few university and college graduates will ever be required to read Margaret Atwood, Alice Munroe or lesser literary luminaries in the course of their studies
• Purporting to collect and remit payments for foreign repertoire
• Refusing to meaningfully engage in transactional licenses, which are often successfully obtained from Acs overall more reasonable cousin in the USA, namely the Copyright Clearance Center
• Barking noisily with no teeth to bite. Remember that AC has no standing to sue anyone for copyright infringement, since it is neither an assignee nor exclusive licensee of anyone. This was explicitly confirmed by the SCC in 2021 in the York case.

Once upon a time, AC was able to convince universities to hold their noses and pay a $3.38 FTE cost and offload the $0.10 per page “course pack” charge directly to students. Of course, paper course packs have gone the way of the horse and buggy. Moreover, the legally questionable “indemnity” that AC once offered that was an incentive to that dubious business model has long since been unavailable. I pointed out 24 years ago that AC never has been a licensed insurance company.

It will be recalled that for 2011-2013 AC wanted a mandatory FTE tariff to be set by the Copyright Board of (a) $45.00CAD for Universities; or (b) $35.00 CAD for all other Educational Institutions.

As AC excessively escalated its litigation strategy by then suing York University to enforce its “interim” tariff improvidently provided by the Copyright Board, from which no judicial review was sought due to the strategy of AUCC (now Universities Canada). While AUCC and York continued to spend money and go nowhere, some institutions realized that there was no need and no point in spending lots of money for little or no value. Ariel Katz started in his “hall of fame” and “hall of shame” list. He and I blogged at length about why tariffs should not be mandatory.

Ariel and I, along with a very smart young law professor named David Lametti, who later became Minister of Justice, made the prevailing arguments in the SCC in the 2015 case of
Canadian Broadcasting Corp. v. SODRAC 2003 Inc., 2015 SCC 57 (CanLII), [2015] 3 SCR 615, <https://canlii.ca/t/gm8b0> namely that:

[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.

That message did not, however, sink in to AC, AUCC or York. Instead, after years more of unnecessary litigation, during which York unnecessarily and unwisely “bet the farm” on the very poor AUCC fair dealing guidelines,  the SCC finally made it sufficiently explicit that AC’s tariffs are NOT MANDATORY in the PSE sector or elsewhere. Naturally, where tariffs are de facto in contrast to de jure mandatory, e.g. SOCAN tariffs for radio and TV stations, users will still keep on paying and the Copyright Board will hopefully do a much better job than it has done in recent decades of adjudicating any disagreements quickly and correctly.

Fast forward to the landmark SCC York decision in 2021 wherein York University very nearly snatched defeat from the jaws of victory but finally after 8 years fully and frontally faced the “mandatory tariff” and brought in the highly charismatic and ultra competent barrister Guy Pratte to adequately make the argument, at least on the “mandatory” issue, that York had effectively sidestepped before.

With all due credit to Mr. Pratte, my client CARL deserves full credit for empowering me to make the finally prevailing argument that:

• Tariffs aren’t mandatory
• Because the tariff isn’t mandatory, there was no live controversy about fair dealing that required the SCC to look at the bad AUCC/Universities Canada/York fair dealing guidelines devised by AUCC’s counsel years earlier.
• While not necessary, the SCC at our behest did comment on some of the more egregious errors in the Courts below, e.g. re aggregate copyright.

Ariel Katz made his own supportive intervention that helped carry the day, ably presented by Sana Halwani.

Americans would shake their heads in total disbelief at the notion of a “mandatory tariff”, which would be a poorly disguised Canadian subsidy masquerading somehow as an authors’ “right” – like that $0.29 per blank CD we are forced to pay due to Copyright Board impotence (to be charitable) to prop up another long due for extinction collective, namely the CPCC.

Canada throws billions in subsidies at Volkswagen & Stellantis that will likely go down the toilet even if the EV bubble doesn’t burst soon given the competition from far more productive and efficient sources in China, Thailand or eve the USA….

Warning for Ministers

Do not pander to noisy demands from Quebec, where the mantra that more copyright is always better has caused mischief and damage for decades. If the Quebec government wants to shovel money at COPIBEC, let them. There is no reason for this folly to spread throughout Canada at the federal level.

Speaking of the federal level, the kind of changes that that AC and its supporters are calling for may very well be unconstitutional.  Education and property and civil rights are provincial jurisdiction. Freedom of expression is guaranteed by the Charter. There are many other issues. Proceed at your peril.

Liberal governments have tended to pander to copyright maximalists. But this hasn’t always had good results in either policy or politics. Ask Sheila Copps and Sarmite Bulte, for example.

What Lies Ahead

The current campaign of Access Copyright – and its gullible and shrill supporters ranging from Kate Taylor and Hugh Stephens to the usual and much  less credible suspects – should be disregarded by Government as the highly orchestrated public interest scam that it is.

And now  – we just now have had a cabinet shuffle. Sadly, Hon. David Lametti – Minister of Justice – is out. While copyright was never directly part of his portfolio, he was by far the most legally learned member of the previous Cabinet – or any cabinet for a very long time. His potentially moderating influence may be missed. He was certainly very knowledgeable about copyright – and was, as noted above,  involved in the important CBC v. SODRAC case that resulted in an important SCC decision that led up to the 2021 York decision.

And we now have Pascale St-Onge replacing Pablo Rodriguez as Heritage Minister. Her qualifications for this job include that she is from Quebec, played bass in a punk rock band, is the first out lesbian minister in Trudeau’s cabinet and was Minister of Sport. That’s enough to play out very well in Quebec, which is ultra-important to this government. Meanwhile, Pablo Rodriguez – who has left her with a huge mess – remains Quebec Lieutenant and is now, inexplicably, Minister of Transport. If Minister St-Onge is well advised, she will realize that copyright law is not a hill to die on. She might wish to ask Sheila Copps, Sarmite Bulte, and others about that.

The other minister, who should historically be primarily responsible for copyright law and policy, is FP Champagne of ISED, who remains in place. H may be mindful that the copyright file is presumptively toxic and is best avoided at all costs, especially for someone who may have leadership aspirations.

We wait in trepidation to see what the PMO will tell these ministers to do in  new mandate letters. The unfortunate breakdown of the old cabinet system and the centralization of policy making in a politicized and non-expert PMO means that professional public servants – whose policy influence has declined precipitously since the days of Pierre Trudeau – will be of little significance other than to make the PMO’s wishes their command.

Above all, the PSE sector and other use groups need to step up to the plate. Universities Canada cannot be counted upon for leadership. It has failed badly on this file for three decades – and particularly in the most recent. U of T’s new fair dealing guidelines are a major step backwards and are disappointing to most informed observers in the PSE sector. The retirement of U of T’s former general counsel Steve Moate has been a setback for balance and leadership within the influential “U15” group of leading Canadian research universities.

In searching for a new President, Universities Canada now has an opportunity to show more competence and leadership on these issues than it has in the las in the last three decades or so. Let us hope that that the right person can be found. However, this recruitment could take a while and the resulting course correction much longer in turn.

We need to see the responsible smaller organizations with less resources but more insight and ability step forward and write their own op-eds, do their own effective lobbying (i.e. meeting with Ministers), and develop their own updated fair dealing guidelines. Their silence after that Kate Taylor travesty was deafening. I believe that I was the only one who stepped forward and that was purely in my personal capacity.

We need to see a response to all of these big lies. Otherwise, given the absence of any competent ministerial leadership, we could be facing an impending debacle.

 HPK

 PS: A reminder that I was involved in litigation regarding Access Copyright and the CPCC for a long time. However, I am now “not practicing law”.

The “M” Word in Canadian Copyright Law – The “Mandatory” Matter

After almost a full decade since the application was filed, the Copyright Board of Canada released its Access Copyright Post-Secondary tariff and decision at the end of the day on Friday, December 6, 2019. Objections to the next round of Access Copyright tariffs were due on the following Monday December 9, 2019. That deadline was, itself, 30 days earlier than the usual 60 days that has been in place for decades. I’ve written about that ill-conceived abridgment of time and the related changes that will do little if anything to speed things up at the Copyright Board.

The greater irony and inconvenience of the Copyright Board’s timing on this decision was that December 6, 2019 was just two weeks before the academic community in Canada virtually shut down between December 21, 2019 and January 6, 2020 and communications with and among that community may have become difficult or even impossible. The Copyright Board’s timing is nothing if not interesting. It came almost four years after an effectively uncontested hearing and well over a year after the expiration of the Board appointments of two of the three members who were seized of the case.

The Board’s timing caused the countdown clock to begin to tick on December 6, 2019 on the 30-day deadline to file a judicial review Notice of Application concerning the Access Copyright tariff. That deadline is hardwired under s. 18.1 of the Federal Courts Act and is not postponed by the “Christmas Recess” provisions which apply only to deadlines set under the Rules and not the Act and which happen to coincide with the academic community break.

For whatever reason, there have been no notices of applications for judicial review filed.

In any event, one of the most interesting aspects of the Board’s decision was that it notably and conspicuously stated that:

The mandatory nature of the tariff

[357] The Tariffs are silent on whether compliance with a tariff is mandatory for users who do not seek to benefit from the licence offered thereby. We are aware that related issues have been raised in recent judicial proceedings [FN Canadian Broadcasting Corp v SODRAC 2003 Inc, 2015 SCC 57] and it is not necessary for us to opine on the issue at this point.

[358] To the extent it might be appropriate for a tariff to include wording whereby its benefits and obligations would only apply on an opt-in basis, we would appreciate a more complete record before including such a provision and invite affected persons to participate in the proceedings on the next occasion the Board considers proposed tariffs for these users.

(highlight added)

It is important to remind the entire educational community that the Supreme Court of Canada (“SCC”) agreed in 2015 with the submissions that I made on behalf of Prof. Ariel Katz and Prof. David Lametti, as he then was, and his CIPP institute at McGill that resulted in the 2015 CBC v. SODRAC ruling that Copyright Board tariffs are not mandatory. Here is the gist of what the SCC majority, per Rothstein J. ruled:

[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(1) 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”. 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 license the use of the works at issue. It says nothing, however, about whether these terms are to be binding against the user.

…

 [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.

…

 [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 CanLII 38 (SCC), [1943] S.C.R. 348, at p. 354, 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.

(highlight added)

Here is the Factum behind our submissions.

If, as the SCC held in CBC v SODRAC, the Board’s determination of royalties and related terms and conditions cannot be imposed on users even in so-called “arbitration” proceedings (which allow a collective or a user to ask the Board to fix the royalties or any related terms and conditions when the parties are unable to agree on them), then the Board’s determination of tariffs (which are proposed by a collective and set the royalties and related terms and conditions applicable to a class of users, whether or not they participate in the Board proceedings), should be all the more (“a fortiori” as lawyers say) non-mandatory.

Unfortunately, the very clear ruling of the SCC that tariffs are not mandatory was not followed in the 2017 Federal Court of Canada’s Access Copyright v. York University judgment. This may have been due to the decision of York University’s counsel to focus on whether the interim tariff was mandatory and not to address – and even to seemingly “effectively” concede – the point about whether final approved tariffs are mandatory and not to rely on the CBC v. SODRAC decision. See Ariel Katz’s very important post mortem analysis  of Justice Phelan’s decision:

The most important question in Access Copyright v. York University was whether “approved tariffs” can be imposed on users. Access Copyright’s road to victory required it to convince the Court that approved tariffs are indeed mandatory and that the Interim Tariff was an approved tariff. York could have scored a short-term victory by persuading the court that the Interim Tariff couldn’t possibly be an “approved tariff” regardless of whether an approved tariff would be mandatory, but it would have scored a long-term victory if it persuaded the Court that even a final approved tariffs wouldn’t be mandatory. After the Supreme Court’s judgment in CBC v. SODRAC, the conclusion that Access Copyright’s tariffs aren’t mandatory should have been low-hanging fruit.

But York chose to bet on the first option. Not only did it fail to convince the Court that the Interim Tariff wasn’t an approved tariff, but by failing to counter any of Access Copyright’s arguments on why approved tariffs are mandatory, it effectively conceded that they are. In losing this battle, then, it looks poised to lose the war.

Nobody can tell how Justice Phelan would have decided this issue if York had made submissions on it. Maybe he would still find Access Copyright’s arguments more compelling. But without even trying to vigorously counter Access Copyright’s submissions on this point, Justice Phelan was predictably bound to agree with Access Copyright.

(highlight added)

York University’s approach to the “mandatory” issue was more cognizant of CBC v. SODRAC in the Federal Court of Appeal (“FCA”) hearing, which took place on March 5 & 6, 2019. The “mandatory” issue was also addressed to some extent by interveners.

It could have helped if the FCA had not unfortunately declined to allow the intervention of my client CARL, which would have fully and forcefully addressed the issue. Here is a link to my blog on the eve of the FCA hearing, which contains links to CARL’s material that I submitted in support of its leave to intervene motion and motion for reconsideration. CARL would have argued, essentially, that:

o   First, the learned trial Judge made a fundamental legal error in holding that tariffs, such as those proposed by Access Copyright, whether interim or final, are mandatory for users. This was a threshold issue that had not been fully and forcefully addressed by York at trial. Had this issue been correctly decided and preferably at an early stage, this litigation, which is only the first of two planned phases, could have ended much earlier. This litigation was based upon the Interim Tariff imposed by the Copyright Board on December 23, 2010 in a proceeding that has still not resulted in a final approved tariff or a decision. A correct decision would also have prevented much potential future litigation, some of which has recently been commenced.

o   Second, CARL will submit that the Court below need not have and should not have dealt with the issue of infringement and fair dealing, because Access Copyright, which lacks standing to sue for copyright infringement, cannot ask the Court to make findings on any alleged infringement by institutions such as York. CARL believes that the learned trial Judge’s findings on infringement and fair dealing, which should not have been made, are seriously erroneous, particularly with respect to the need for monitoring and supervision as well as aggregate copying, and in any event, are merely obiter dicta.

The FCA hearing mostly focussed on fair dealing. This was ironic, because it doesn’t really matter whether York’s guidelines were consistent with fair dealing if the tariff isn’t mandatory. If York or any other university is infringing, it can be sued for copyright infringement like anyone else – though not by Access Copyright, which is neither a copyright owner nor an exclusive licensee. If the tariff isn’t mandatory, then the fair dealing issues and all of the Phase II issues in the York case – which haven’t even begun to unfold – will simply go away.

For whatever reason, the SCC’s clear ruling has not been fully assimilated thus far. Indeed, countless K-12 school teachers at 300 schools across Canada are being forced as we speak to dredge up old lesson plans in litigation involving this issue because a stay  was denied in proceedings in which the “mandatory” question is central, in spite of the fact that a decision from the FCA was pending in the York appeal. Curiously, the order denying the stay does not even mention the CBC v. SODRAC decision from the SCC. The order was not appealed.

Hopefully, the FCA will make it clear to one and all that the SCC said what it meant and meant what it said in 2015, which is that tariffs are not mandatory. That may be an inconvenient truth for many collectives and for many of the large law firms acting for collectives, users, and in some cases on both sides of the fence. If tariffs are not mandatory, then the Board will have an incentive to issue tariffs in the public interest that will hopefully be attractive to users and binding on collectives, but not on users. That was the essence of the old system of railway tariffs, for example, which set upper limits on the price that train operators could charge customers – but did not force anyone to take the train to get from point A to point B if there were better and/or cheaper ways to get there. That is how the Copyright Act was and is intended to work.

Of course, it also follows that the issue of whether and to what extent tariffs can be retroactive becomes much less important for practical purposes if tariffs are not mandatory. Moreover, Prof. Katz, Prof. Lametti, as he then was, and I succeeded in getting the SCC to put the issue of the “legitimacy of or limits on the Board’s power to issue retroactive decisions” on alert in the unusual and important footnote 2 of the CBC v. SODRAC decision.

Whatever the FCA decides, it is very likely that one side or the other or both will seek leave to appeal to the SCC. If leave is granted, there will likely be a lot of interest in intervention.

In the meantime, it’s been almost 11 months since the FCA heard the York appeal. This delay is unusual from a Court that normally renders decisions in six months and often much less.

It will be very interesting to see whether Access Copyright attempts to enforce its new nine-year retroactive tariff in this extraordinary confluence of circumstances and indecision in the courts below about what seems abundantly clear and decisive from the SCC.

What is mandatory is that all who are concerned with any of this should be paying close attention.  I look forward to talking about the state of play at the University of Alberta Fair Dealing Week event on February 26, 2020.  This will be about a week before the one year anniversary of the FCA’s hearing of the York University appeal.

HPK

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 suggested, if 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 Tétrault 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

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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.

(highlight added)

[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.

(highlight added)

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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.