Tanya Woods v. University of Ottawa – Later Developments Following the Chet Baker Pending Lists Class Action

 I have not blogged about the Chet Baker Pending Lists class action for a long time. Here’s what I wrote on my blog in 2012. I noted potential financial implications for CIPPIC  (the legal clinic at University of Ottawa) (“U of O”), and its then lawyers and students, including Ms. Tanya Woods:

Here’s the judgment of the 2011 Ontario Superior Court:

“approving the fees of Class Counsel in the amount of $6,250,000 plus taxes and directing that such amount be paid out of the Settlement Trust”:

Baker (Estate) v. Sony BMG Music (Canada) Inc., 2011 ONSC 7105 (CanLII), <https://canlii.ca/t/fr2dn>

I had also written about this case in 2011.

Here are some later developments regarding Ms. Woods’ subsequent litigation against the University of Ottawa:

•         Woods Statement of Claim
•        University of  Ottawa Statement of Defence
•        Trial judgment in Woods et. al. v. University of Ottawa, 2021 ONSC 5720 (CanLII), <https://canlii.ca/t/jhz3s> awarding Ms. Woods $328,296.82.

Ms. Woods has filed a Notice of Appeal. The appeal has not yet been “perfected” - so it will be a while before we see the factums.

The most recent development is the costs decision of January 5, 2022 “awarding no costs”.

 I will post further developments when available.

 HPK

Follow Up on "Pending Lists" Class Action Settlement - Approval of Counsel Fees and Disbursements

The news about the certification of the class action by lawyers against Westlaw led by my classmate Lorne Waldman reminds me that I have been remiss in updating about the “pending list” class action, on which I blogged extensively before. This involved allegedly unpaid musical “mechanical” copyright royalties on about 300,000 titles and, hence, potential statutory minimumdamages ranging between about $150 million to $6 billion based on the normal $500 - $20,000 range set out in the statute, although the latter figure was never really a serious possibility.

This action settled for what still appears to be a lot of money, namely about $47 million. This is about a third of what an ostensibly “minimum” statutory damages award might have yielded based upon 300,000 songs at the presumptive minimum of $500 each (the court can lower this based on factors including the “good faith” the defendant.)  It is also less than the amount of $50 million that was allegedly unpaid according to the allegations in the Statement of Claim. Class counsel is seeking approval of fees in the amount of approximately 15% of the value of the settlement fund, which works out to $6,950,000 plus disbursements for a total of $7,647,583.85.

The action was originally filed in the name of the Estate of Chet Baker, although the lead plaintiff was changed amidst some apparent mystery and controversy midway. Some of the documents concerning this litigation are available here. 

From a procedural standpoint, this litigation did not get very far and the settlement took place at an early stage. There is no indication that a statement of defence was ever filed. There was presumably no formal discovery.  Certification was not contested. Given the highly technical settlement documentation that clearly reflects detailed knowledge of the music business in Canada, it would seem that defendants’ counsel were very cooperative and may have had a major role to play in drafting the settlement documents. Indeed, as I pointed out last year, CMRRA/SODRAC will receive 10% of all payments made out of the Settlement Trust as “commission” for acting as “settlement administrator”. Presumably, this will be in addition to the regular remuneration that CMRRA/SODRAC receives from copyright owners. They will not have to pay anything to the copyright owners. See here

and here. 

From informationprovided to the Court, 16 named class lawyers and an unknown number of unnamed students and associates at two law firms and a legal clinic at the University of Ottawa have docketed about $2.2 million in time on this case. That amount will more than treble if the 15% contingency fee they seek is approved.

The Motion Record for Approval of Class Counsel Fees etc. contains the following information concerning the docketed time of some of the lawyers:

• The lead lawyer at Harrison, Pensa, Jon Foreman, docketed $747,348 of time.
• Three other members of his firm docketed between $146,422.50 and $180, 127.50 of time.
• The lead lawyer at Bates Barristers, Paul Bates, docketed $565,427.50 of time.
• CIPPIC, the public interest legal clinic at the University of Ottawa, was also involved. Those associated with CIPPIC whose time is accounted for are:
• David Fewer, currently Director of the legal clinic CIPPIC at the University of Ottawa, Faculty of Law: $106,766.67,
• Pippa Lawson, former Director of CIPPIC: $20,249.25
• Tanya Woods: $40,000
• Students: $33,709.50

Presumably, these amounts will more than treble if the 15% contingency fee is approved.

There will be further billings at normal hourly rates for the administration of the settlement, if the Court approves.

The lead plaintiffs, Ms. Carol Baker and her replacement, Mr. Craig Northey, have indicated that although they have no “expectation” of an “honorarium”, they would be “grateful” for whatever the Court may approve.

Disbursements amounted to an additional $87,788.66 including tax. These ranged from a low of $20 for taxis/Parking to $27,928.28 to Jeremy Debeer, a law professor at the University of Ottawa and a member of Centre for Law, Technology and Society, which provides guidance, as an internal advisory board, to CIPPIC. The payment to Prof. Debeer was for preparation of an affidavit and for attendance for cross-examination, including travel expenses.

  

The motion to approve these fees was apparently to be put to the Court on November 27, 2011. There is no indication on the class website whether any other submissions were received or whether the Court has yet ruled.

The settlement mechanism considers any unpaid amount over $2,500 to be a “high value item”.  If counsel fees are approved as asked on the basis of 15% of the value of the settlement, and CMRRA/SODRAC (CSI) gets paid a 10% commission, the payment for the 300,000 works will come from a pool of approximately $36 million. This suggests that the average payment for each work will be more or less about $120. 

More Questions But No More Answers about the Pending Lists Class Action - Next Hearing on May 30, 2011

After some adjournments, the settlement approval hearing is currently scheduled to be heard on Monday, May 30, 2011. I've written about it length before here and here and here.

There are still lots of questions but no more answers - at least not for the public, which includes potential class members.

This is no doubt the largest copyright class action in Canada - and on its face is worth about the same in its payout to copyright owners (before expected substantial deductions) as the Google Books proposed settlement, recent shot down decisively by Judge Denny Chin in the SDNY. I recently spoke about the Google case at Fordham and wrote about in WireReport.

Class action counsel has politely informed me on March 26, 2011 that:

There is no further publicly filed documentation which can be provided to you.  Any further documentation will be posted on our website.

As of today, there are no new documents on that website.

The settlement approval hearing is due to take place at 2:00 PM on Monday, May 30, 2011 at Osgoode Hall, Toronto (Queen and Bay). For those in Toronto, it may be worth attending and I'd be interested in any reports.

HK

“Volume Discounts” in CDN Statutory Minimum Damages Cases: When Available? A "License to Steal"?

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In my recent blog on the proposed Chet Baker $45 million class action settlement which has yet to be approved by the Ontario Superior Court of Justice, I touched on the issue of whether there might be a “volume discount” in a case allegedly involving the infringement of more than 300,000 different songs. The “normal” minimum of statutory damages in Canada is $500 per work (not per copy). At that rate, the case would have presumably been worth at least $150 million, assuming that the allegation of 300,000+ infringements would be provable and had it gone to trial.


A court does have the discretion to reduce the normal minimum statutory damages amount of $500 per work below the said minimum under very limited circumstances. Here are the relevant provisions from legislation:


*************************
Statutory damages
38.1 (1) Subject to this section, a copyright owner may elect, at any time before final judgment is rendered, to recover, instead of damages and profits referred to in subsection 35(1), an award of statutory damages for all infringements involved in the proceedings, with respect to any one work or other subject-matter, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than $500 or more than $20,000 as the court considers just.


Where defendant unaware of infringement


(2) Where a copyright owner has made an election under subsection (1) and the defendant satisfies the court that the defendant was not aware and had no reasonable grounds to believe that the defendant had infringed copyright, the court may reduce the amount of the award to less than $500, but not less than $200.


Special case


(3) Where
(a) there is more than one work or other subject-matter in a single medium, and
(b) the awarding of even the minimum amount referred to in subsection (1) or (2) would result in a total award that, in the court’s opinion, is grossly out of proportion to the infringement,
the court may award, with respect to each work or other subject-matter, such lower amount than $500 or $200, as the case may be, as the court considers just.


Collective societies


(4) Where the defendant has not paid applicable royalties, a collective society referred to in section 67 may only make an election under this section to recover, in lieu of any other remedy of a monetary nature provided by this Act, an award of statutory damages in a sum of not less than three and not more than ten times the amount of the applicable royalties, as the court considers just.


Factors to consider


(5) In exercising its discretion under subsections (1) to (4), the court shall consider all relevant factors, including
(a) the good faith or bad faith of the defendant;
(b) the conduct of the parties before and during the proceedings; and
(c) the need to deter other infringements of the copyright in question.


No award


(6) No statutory damages may be awarded against
(a) an educational institution or a person acting under its authority that has committed an act referred to in section 29.6 or 29.7 and has not paid any royalties or complied with any terms and conditions fixed under this Act in relation to the commission of the act;
(b) an educational institution, library, archive or museum that is sued in the circumstances referred to in section 38.2; or
(c) a person who infringes copyright under paragraph 27(2)(e) or section 27.1, where the copy in question was made with the consent of the copyright owner in the country where the copy was made.


Exemplary or punitive damages not affected


(7) An election under subsection (1) does not affect any right that the copyright owner may have to exemplary or punitive damages.


1997, c. 24, s. 20.


(Emphasis added)


******************************
Clearly, in a case such as the Chet Baker case, there could be no reasonable argument that the defendants were "not aware" or that there were “no reasonable grounds to believe that the defendant had infringed copyright”.


This leaves s. 38.1(3) which deals with the situation where:


Special case


(3) Where
(a) there is more than one work or other subject-matter in a single medium, and
(b) the awarding of even the minimum amount referred to in subsection (1) or (2) would result in a total award that, in the court’s opinion, is grossly out of proportion to the infringement,
the court may award, with respect to each work or other subject-matter, such lower amount than $500 or $200, as the case may be, as the court considers just.


(Emphasis added)


The word “and” would appear to be clearly “conjunctive”, which means that both the conditions in s. 38.1(3)(a) and (b) both must be met before a court could reduce damages below $500 per work by then taking into account, in turn,  the factors in s. 38.1(5) i.e.


 including
(a) the good faith or bad faith of the defendant;
(b) the conduct of the parties before and during the proceedings; and
(c) the need to deter other infringements of the copyright in question.


The really interesting question is what is meant by “a single medium”. There is no equivalent expression in the USA, which is the only other country to have a comparable statutory minimum damages regime. Canada imitated it with a slightly watered down version, for which the CMRRA (closely involved in the Chet Baker case)  was, ironically, a prime source of pressure.


It surely cannot mean a single type of medium - such as all books or all CDs or DVDs from one defendant  containing multiple works. That would potentially create a “license to steal” for record company that releases thousands of CDs, for example,  each containing one or more infringing works. A pop music commercial CD typically holds 12-14 or so single song tracks - but can hold up to two dozen or so three minute songs, if and when the record company chooses to be more generous.


It would seem likely that the provision would allow for a reduction, in theory, only  if several songs were included on each single medium  - as in each released CD or LP, or whatever in a record company’s catalogue. And NOT as in the entire CD medium catalogue of a single record company. 


And even then, the amount would have to be “grossly out of proportion” to the infringement. This does not seem likely if several infringing songs - up to 12-14 or so  are used per CD album. That would only be $6,000 to $7,000 for one album that could have substantial sales at a putative mechanical rate of about $1.00 for each copy of such an album.


We have very little jurisprudence on the discretion of a Canadian court to reduce statutory minimum damages. The closest ruling I know of involved a case in which the defendant posted 2,009 infringing works on the internet copied by decoding satellite signals. This was the decision of Justice Lemieux of the Federal Court in Telewizja Polsat S.A. et al. v. Radiopol Inc. et al. 52 C.P.R. (4th) 445. 


There was a default judgment and the damages hearing was undefended. Thus, the presidential value of this decision is somewhat imited. The Plaintiffs sought more $40 million, based upon the maximum statutory damages of $20,000 per work and the number of 2,009 works. Nonetheless, the Court took it upon itself to reduce the amount to $150 each, given the large number of works. It is implicit - though not explicit - that the Court considered that the defendant had used a “single medium” - presumably its subscription-based internet website.


So - what if the release of thousands or tens of thousands of infringing CDs each containing one or more infringing works must be considered as thousands or tens of thousands of single “media” and not “a single medium”.  Then, it would appear that the Court does NOT have the discretion to reduce the amount of the minimum statutory damages below $500 per work.


We do not have an answer to the “important questions” raised by Justice Lemieux in the Polsat decision. If the Chet Baker settlement is approved, we will not know how these issues played out behind the scenes in that case in the settlement negotiations - or how a court might have ruled if required to do so.


Is the result of the proposed settlement - namely $45 million for allegedly 300,000 works - or about $150 per work, which is the same as in the default judgment and undefended Polsat damages decision (but before deductions for legal fees, CSI commissions, etc.) - a serious and appropriate remedy for the composers and reflective of the “need to deter other infringements of the copyright in question”? Or is it an example of what these same record companies might call in the context of infringement by non-commercial downloaders (i.e. fans) a “license to steal”?


We won’t know if the settlement is approved and the case never goes to trial. 


The settlement approval hearing has been adjourned to March 28, 2011 - at which time we may or may not have a ruling on whether they Court is satisfied with the settlement being presented to it. In view of previous developments, this is not a foregone conclusion.

HK

Approval of $45 million Estate of Chet Baker Estate class action settlement is somewhat unsettled

 

  

The fate of the potentially largest Canadian copyright class action lawsuit may be in limbo.

Here's an update on the class action law suit against the four big multinational record companies led by the Estate of Chet Baker. This update follows upon a report from March 8, 2011 by Drew Hasselback, himself a lawyer and the legal post editor of the National Post/Financial post. Here is my original blog about this from February 8, 2011. 

It seems that certain matters had not been finalized at the time of the settlement approval hearing scheduled for February 15, 2011. I don't know whether these may have  included some of the issues I raised in my earlier posting. Moreover, Paul Baker, the son of Chet Baker had raised an issue concerning the right of his mother, Carol Baker, one of the representative plaintiffs, to enter into an agreement on behalf of the estate. 

The class action settlement web site has been updated since my last blog, which noted the absence of the apparently important CSI Term sheet. The site now includes the very important term sheet agreed upon by the Estate and Chet Baker Enterprises LCC and an amended cooperation and minutes of settlement agreement agreed upon by Carol Baker as Personal Representative for the Estate of Chesney Henry "Chet" Baker Junior and Chet Baker Enterprises LLC. Both documents were executed on behalf of these parties by Jon Foreman, who I assume is the same Jonathan Foreman who is one of the lead class action counsel. These two documents are dated January 31, 2011, i.e. about two weeks before the originally scheduled settlement approval hearing date of February 15, 2011. I don't know when they were posted on the settlement website but it appears that they were scanned on February 14, 2011. The Term Sheet is very complex.  

If approved by the Court, the settlement would be by far the largest copyright class action settlement in Canada to date - about three times bigger than the Robertson case, which took years to resolve and went all the way to the Supreme Court of Canada.  Indeed, it would entail more than one third of the total face value of the settlement in the proposed Google Book Settlement, the mother of all copyright class actions that may or may not get approved by a US Court. It is about the same as the US $45 million that Google agreed to pay rights holders, apart from other payments for legal fees and establishment of a registry that would bring the Google total to about $125 million. However, legal fees and other significant costs will be deducted from this proposed Canadian settlement.

The Robertson case took at least a dozen years from the statement of claim until the payout cheques were finally mailed just the other day and had to go to all the way to the Supreme Court of Canada, where judgment was rendered in 2006. The Google class action is now about 5.5 years old and has probably not even reached the "end of the beginning" stage. Indeed, Judge Denis Chin - one of the most highly regarded and decisive trial judges in the USA (he was entrusted with Bernie Madoff) - has been deliberating on a decision on the amended proposed settlement for over a year. Few expect that his decision will be the end of the matter. Here's a possible flow chart for the aftermath.

By contrast, this "pending lists" matter will have been resolved -  if indeed it does get approved by the Court as requested - relatively extremely quickly in about 2 1/2 years and without most of the normal and time consuming litigation stages. In fact, there is no reference on the settlement website to even a statement of defence having been filed. So, presumably there was no discovery. The publicly available documentation in support of the approval hearing is available here, and is not very extensive - though as noted above it now finally includes the important 36 page "term sheet" which is described on the settlement website as "Key Terms of Settlement". Presumably very few potential class members would have had a chance to see this essential document prior to it being posted.  Some other significant aspects of the settlement have not been made public at all, as I noted earlier. One of the more interesting aspects of the settlement was that the opt-out threshold is to be provided to the Court on a confidential basis. The total fees sought for class action counsel have also not been disclosed. By way of contrast, the posted Google documentation is vastly more detailed, voluminous and informative.

The settlement is for less than the face amount of $50 million allegedly admitted to be owing by the record companies.

Out of that, there will be a request for approval of what will likely be several million dollars in legal fees, disbursements and commissions deducted before any money reaches music composers. The total amount of deductions that will be sought has not been disclosed on the settlement website. While $45 million or so is indeed an impressive amount, it is a very small fraction of the originally estimated liability figure of more than $6 billion based upon potential statutory minimum damages. This $6 billion figure was originally announced and explained by Prof. Michael Geist, who who founded and oversees CIPPIC (the legal clinic located at and supported in part by by the University of Ottawa), that has been closely involved in this very big stakes case.

It is expected that few potential class member claimants will receive more than a few hundred or a few thousand dollars at most. The class action lawyers and CSI will receive several millions if the settlement is approved. The record companies will have gotten off for less than the allegedly admitted face value of the amount owing.

It would all work out to something less than $135 per song net in the hands of composers  after deductions. The record companies apparently didn't pay for the necessary rights over the years, thereby allegedly infringing their own artists' and other artists' copyrights. The normal minimum statutory damages amount that a court would award is $500 per title, though the court has discretion to reduce this figure.There were allegedly more than 300,000 works in issue. So, a "volume" discount would have been conceivable if the court were to have found that application of the minimum of $500 was "grossly out of proportion to the infringement".

Interestingly, these are the very same commercial record companies that are saying that a proposed $5,000 cap on statutory damages per individual for non-commercial copying in Bill C-32 is a "license to steal".

Here is the Judge's recent order and endorsement, which is rather unusual for a matter involving a settlement worth almost $50 million dollars. This recent order and the adjournment is not currently reflected on the class action settlement website.

HK

*******************

ENDORSEMENT AND DIRECTION

[1]               This motion for certification of this action as a class proceeding under the Class Proceedings Act 1992, S.O. 1992, c. 6, and for approval of a settlement agreement made between the representative plaintiffs and the defendants, was originally returnable on February 15, 2011. On that date, counsel reported that certain aspects of the settlement had not been finalized and the motion was adjourned to this date.

[2]               On the appearance before me today, counsel advised me that the final settlement documentation will likely be completed in the next few days and that a further adjournment is requested. All parties agree to an adjournment. 

[3]               There is a further issue. A letter was sent to the court by Paul Baker, the son of Chet Baker, who claims a one-eighth interest in the estate. Mr. Baker raises an issue concerning the right of his mother, Carol Baker, one of the representative plaintiffs, to enter into an agreement on behalf of the estate. A copy of Mr. Baker’s letter was forwarded to all counsel. Mr. Baker was informed by my assistant that his letter would be raised at the hearing today and he was asked to direct further correspondence to counsel and not to the court.

[4]               Counsel for the plaintiffs is considering the appropriate response to the concerns raised by Mr. Baker. This may include the production of further evidence (if available) to satisfy the court and counsel for the defendants that Carol Baker has authority to enter into an settlement agreement on behalf of the estate and on behalf of the corporate plaintiff. It may include a motion to substitute or add another representative plaintiff. It may include some other form of relief.

[5]               In view of the foregoing, I adjourn the motion for settlement approval, and any other motions the plaintiffs wish to bring, to Monday, March 28, 2011, at 10:00 a.m. in Courtroom #6, Osgoode Hall, 130 Queen Street West, Toronto Ontario.

[6]               I give the following additional directions with respect to the issues raised by Mr. Baker:

(a)               Mr. Baker shall be provided with all material in support of the motion for settlement approval and all material in support of any other motions to be heard on March 28, 2011.

(b)               Mr. Baker shall be provided with PDF copies of material previously filed and shall be referred to the location of such material on the web site of plaintiffs’ counsel. Mr. Baker shall be served with both paper copies and electronic copies of any new material to be filed on the motion(s).

(c)               Service shall be effected by either registered mail or by courier to the address shown on Mr. Baker’s letter of February 6, 2011 and by email addressed to the internet address shown on that letter.

(d)               Mr. Baker shall also be served with a copy of this endorsement, in both paper and electronic form.

(e)               Mr. Baker shall be informed, by letter from plaintiffs’ counsel enclosing a copy of this endorsement, that (i) he is entitled to appear on the motion(s) in person or by counsel; (ii) he is entitled to file sworn evidence on the motion(s); (iii) he is entitled to make written submissions on the motion(s); and (iv) if he fails to appear on the motion(s), or fails to instruct counsel to appear on his behalf, the court may proceed in his absence. Any evidence or submissions made by Mr. Baker shall be delivered to plaintiffs’ counsel and to counsel for the defendants. Plaintiffs’ counsel is directed to provide the court with a copy of any evidence or submissions made by Mr. Baker.

---

                 G.R. Strathy J.

Date: March 7, 2011

The $45,000,000 Chet Baker Estate Copyright Class Action Settlement - The February 9, 2011 Deadline

The class action on behalf of Chet Baker against the major record labels in Canada has been settled, according to a press release The labels will reportedly pay out about $45 million. That sounds like a lot - and indeed it is by any measure in Canadian copyright litigation. However, this figure can better be seen in perspective when one reads the Fresh as Amended Statement of Claim  (“the Claim”), which alleges that there were 300,000 (not a misprint) works on the “pending lists”  “for which no license has been obtained and no compensation has been paid to the class owners.”  The Claim states that “According to the Record Companies, the lists reflect liability for unpaid royalties in excess of $50,000,000." 

Initial reports had the law suit valued at $6 billion based upon statutory damages of $20,000 a piece for 300,000 works.

After an unspecified number of millions more in legal fees, disbursements and commissions are paid out from the settlement funds, something likely well under an average of $135 will be paid to copyright owners for each work allegedly infringed. This may not sound like very much. Indeed, if the figures in the Claim are accurate, it’s less than the face amount of what is owed.  However, it is a significant chunk of what was allegedly owed and is far better than nothing. Whether it is enough is for class action members and their advisors  to decide, assuming that they are aware of the deadline of February 9, 2011 to voice their objections prior to the scheduled approval hearing date which is set for February 15, 2011.

In any event, the record companies and CSI (CMRRA + SODRAC) appear to be very happy with this result, which is hardly surprising considering that they are apparently, according the Claim, paying less than the face value of the amount owing after several years and after legal costs. Arguably, they are about to get, effectively, a judicially sanctioned retroactive compulsory license on a massive scale.
   
Although announced on January 10, 2011, this has received remarkably little attention, especially considering that it is probably the largest ever class action copyright settlement in Canada, and is worth more than four times the $11 million settlement in the Robertson case that went to he Supreme Court of Canada. However, despite the large sounding figure - is not notably generous to the class members, who will receive at the end of the day, which could be a very long time from now if at all (assuming that they can be found), something likely well under an average of $135 per title infringed. This is far less than the $20,000 first forecast per infringement and less than a third of the normal minimum statutory damages amount of $500 per work - BEFORE further legal and other costs (which could be very substantial) are taken into account.   

And the obvious fact is that this involved alleged infringement by the worlds biggest record companies, which are commercial businesses.

All of this arises from allegations “that the Record Companies are liable for copyright infringement by reproducing certain musical works in sound recordings released in physical formats in Canada, without securing licenses from the owners of copyright in those musical works and/or without payment of the necessary royalties”.

Once upon a time (prior to 1988) we had a compulsory mechanical license system in Canada. A record company could use this license to make a sound recording by paying the required fee.  The USA still has this system. Now, we have a system where licenses (i.e. permission) is supposed to be obtained in advance for each recording, and the agreed amount must be paid. Enter CMRRA (English Canada) and  SODRAC (French Canada), which can provide many but not all necessary licenses on behalf of many but not all music publishers and copyright owners These organizations had a very small footprint prior to 1988.  CMRRA/SODRAC represents music publishers. However, a good chunk of the music publishing business is owned by the record companies. Interestingly, CMRRA was largely responsible for the abolition of the mechanical license in 1988 - based upon the memorable slogan of “Two cents too long.”

According to the Court approved Notice:

    The “Pending Lists”

    The class action pertains to a process whereby the Record Companies maintain lists, usually referred to as “Pending Lists”, pursuant to mechanical licensing agreements with CMRRA. Those lists itemize musical works that have been reproduced by the Record Companies in sound recordings (and in some cases, video products) released in physical formats in Canada, for which the Record Companies have not, for various reasons and despite ongoing efforts, secured licences from and/or paid royalties to the owners of copyright in those musical works. 

Also, according to this Notice:

    CMRRA and SODRAC agreed to and have provided the plaintiffs with evidence, cooperation and assistance to the plaintiffs in exchange for a release of the claims made against them.  

This is somewhat odd since CMRRA and SODRAC would have had to provide evidence in any event, if pressed,  through the discovery process. After all, they were named as Defendants. Needless to say, CMRRA and SODRAC are in an interesting position here, given their relationship with the big record companies on the one hand and composers and publishers on the other hand, particularly considering that the record companies have very major publishing interests.

In the end, not only are CMRRA and SODRAC let off the hook in the settlement - they indeed will actually benefit from it with the 10% “commission” they will receive - see below. This is presumably in addition to the amounts they would normally earn from their licensing activities.

It is possible that the normal minimum statutory damages award amount of $500 was negotiated down for a number of reasons, which could include the provisions of the statute itself allowing this where there are a large number of works and the ostensible three year limitation period in the statute. The limitation period issue might have been very interesting, it’s far from clear how that  limitations period might have applied  in a situation such as this, where much of the alleged infringement may not have been reasonably discoverable by many of the plaintiffs.

For reasons which are explained further below, it is not clear from the available documents how the settlement will resolve the issues that led to this litigation on a going forward basis.

Some limited documentation is available on the Plaintiff’s lead counsels' website. These documents indicate that:

•    The four labels will pay collectively a minimum of $750,000 for “partial indemnity costs”.
•    Additional payments for legal fees and disbursements will come out of the Settlement Trust as approved by the Court. The available documentation does not indicate what this amount will be. It is likely that the amount sought will be substantial. However, it is not apparent how far along this case got in the litigation process beyond the statement of claim and the certification stage.
•     CIPPIC, the legal clinic at the University of Ottawa Faculty of Law, which has a mandate to “provide legal assistance to under-represented organizations and individuals on matters involving the intersection of law and technology”,  is listed on the Statement of Claim with its current director (David Fewer)  and former director (Phillippa Lawson) as co-counsel for the class plaintiffs along with counsel in two private law firms. Their role in this case and financial involvement in this settlement and the expected multimillion dollar legal fees are not apparent in the currently publicly available settlement documentation. 
•    CMRRA/SODRAC will receive 10% of all payments made out of the Settlement Trust as “commission” for acting as “settlement administrator”. Presumably, this will be in addition to the regular remuneration that CMRRA/SODRAC receives from copyright owners. They will not have to pay anything to the copyright owners.
•    Notice costs to a maximum of $150,000 will be paid out of the Settlement Trust. These notices, usually in the form of newspaper ads, are often the only vehicle by which class members become aware of their entitlement, the deadlines and procedures for making a claim and, of course, the deadliness and procedures to opt out of the settlement and to seek their own redress if they are not satisfied with the award.
•    For reasons which are not apparent the “opt-out” threshold will be provided to the Court for approval on a confidential basis.       
•    A number of documents referred to in the available settlement documents, such as the potentially very important CSI (CMRRA + SODRAC) “term sheet” are not available.

Thus, the net average payment per work alleged to have been infringed will be something probably well below an average of $135 after CMRRA and SODRAC and the plaintiff’s class action counsel get paid.
   
For better or worse, settlements have no binding precedential value as such in the Courts for future court cases. It would have been very interesting and informative had this matter gone to trial, but we will presumably never know why it did not. Nonetheless, there are some interesting and ironical lessons that some might argue are can be gleaned from this settlement, if it is approved.

For example, the American international parents of the same record companies that are getting off the hook for less than $150 per alleged infringement in Canada are asking for and pushing with all their considerable might for  $62,500 for each of the 24 songs that Jamie Thomas-Rasset, a single native American mother,  downloaded and "shared" in litigation brought by in the USA.

This is even more ironic because the head of the Canadian Recoding Industry Association, Graham Henderson, is on record as complaining that Bill C-32 gives those engaged in non-commercial activity a “license to steal”, even though they could be found liable for far more than $150 per work to a maximum of $5,000. A $5,000 damages award to an individual is far more severe than a $50,000,000 hit that retroactively and with an apparently very substantial discount wipes the commercial mechanical license infringement slate clean for an industry that still takes in about a $1,000,000,0000 a year in Canada from various revenue sources. One might even say that the operative rule that eventually led to this litigation could have been to the effect of "exploit now, pay later if at all."

One positive potential lesson here, but which will likely be lost upon many who could learn from it, its that overly risk-averse management and counsel of Canadian educational institutions who are constantly alarmed by Access Copyright’s veiled threats of statutory damages could take some considerable comfort here.  If this case is any guideline, even mass systematic commercial infringement will settle at a discount. Needless to say, universities are not engaged in such activity. And Access Copyright would likely never have as good as case as the plaintiffs had in this instance.

Thus, it seems that in a very big copyright action involving an extremely large number of titles and owners, a settlement at significant discount may be the logical and even inevitable result if the case is well fought.  In any copyright action involving even one title, there can be fatal difficulties in proving chain of title - especially where there is no timely registration and the actual creator and/or copyright owner are not eager to get involved - and especially so when they are not in Canada.  In mass infringement, there can presumably be mass difficulties.

Facts about the Settlement:
   
The documentation available on the lead law firm’s website is not detailed.  For example, there is no indication of the contents of the CSI “term sheet” that is mentioned many times, nor how CMRRA/SODCRAC will deal with the issues that have arisen in the future. While the Google Book Settlement documentation was enormously voluminous and complex, this documentation is on the other extreme. We do not know, for example, how much the lawyers for the class plaintiffs will receive at the end of the day from the settlement proceeds, or even what they are asking for.  We do not know what the “opt out” threshold will be and why this is confidential. We do not know what is in the CSI “Term Sheet”.

In fact, some key information found in the Wire Report story of January 11, 2011 is more revealing than the settlement documentation. It indicated that CMRRA will, interestingly enough, rely on s. 77 of the Copyright Act to deal with unlocatable owners:

    Basskin [of CMRRA] said the new platform will prevent labels' pending lists from building up anew.

    “We will be assisting the record companies in obtaining licences from the Copyright Board of Canada pursuant to section 77 of the Copyright Act,” he said.

   

    “Under the Copyright Act, if a person who wants to use a copyright has made reasonable attempts to find the owner, but has been unable to do so, he can apply to the Copyright Board for a licence to close that gap. The Copyright Board then takes care of the process of issuing the licence, collecting the royalties and basically advising the public at large, 'if this is yours, come forward and get your money.'”

   

    The CMRRA and SODRAC will also create a website where the public can verify if any of their works are on a pending list.

This is really interesting because s. 77 of the Copyright Act was arguably never intended to set up mass clearances by the Board of thousands of works, especially where the circumstances will be different and difficult by definition in each case. Handing this issue over to the Board and expecting the Board to bless massive numbers of mechanical licenses in bulk for supposedly “unlocatable” copyright owners and deal with the proceeds and claims looks a lot like a compulsory license regime, with the potentially considerable administration costs borne at least in large part by taxpayers. The Board is rarely reticent about asking for more resources, even though it is already apparently by far the largest Board of its type anywhere in the world.

As noted above. that CMRRA expects a 10% commission on the proceeds it distributes for the Settlement Fund, in other words to the locatable owners. This presumably will be in addition to whatever else it gets paid for its agency services.

In any case, the Board has had apparent difficulty handling the relatively small number of requests it has hitherto received in a timely manner. About half of the applications take more than eight weeks to process. It is unclear whether any of the Board actually have any hands on involvement with this process. (The Board has held only one actual “hearing” on an unlocatable issue and the result was a very  troublesome 3-2 split decision). The Board currently estimates that a reasonable normal time delay would be about 45 days, which is likely unsuitable for the music industry.  Currently, the Board receives only a few dozen applications a year for “unlocatable” licenses. In 2008-2009, it received only 28 applications and issued only 14 licenses.  Even with all of its resources, which were recently augmented, the Board still requires as much as 18 months or more from the conclusion of a hearing to issue decisions from the few hearings it holds each year.  (This year, there are none scheduled). What the Board will do with an ongoing  list of conceivably thousands or more of unlocatable copyright owners remains to be seen.

While it is understood that informal talks may have taken place with the Board, it is also understood that there is no formal or official arrangement in place. Nor is there any reference in the available settlement documents to this information disclosed to the media by CMRRA.
   
Approval Hearing of February 15, 2011 and Deadline of February 9, 2011:

Those who may wish to object to the terms of the settlement for any reason should note the following, from the notice approved by the Court and very short deadline from now for making submissions (February 9, 2011) in advance of the approval hearing itself (February 15, 2011). It is unclear to what extent notice of this key step in the proceeding has been given to class members. There are lots of interesting questions in this instance, which may or may not be answered if and when we see more documents.

Note the following from the "Notice of Approval and Settlement Certification Hearing" document:

A hearing to approve the settlements entered into between the Plaintiffs and the Defendants will be held by the Ontario Superior Court of Justice in Toronto on Tuesday, February 15, 2011 at 10:00 am.


Class Members are permitted to appear and make submissions at the hearing with respect to the settlements or to make submissions in writing. If you wish to comment on or make an objection to the settlements, a written submission must be delivered to Class Counsel by fax or regular mail at the contact particulars listed below by Wednesday, February 09, 2011. Class Counsel undertake to forward all such submissions to the Court and to counsel for the Defendants for consideration. If the settlements receive court approval, further notices will be published to advise of such court approval.


Class Members who do not oppose the proposed settlements need not appear at the hearing or take any other action at this time to indicate their desire to participate in the settlements. The process for Class Members to make a claim for settlement benefits will be explained in the future within a subsequent notice.

The Fax number for Jonathan Foreman at Harrison Pensa, the lead counsel, is:
Fax: (519) 667-3362

Anyone wishing to object to this settlement should fax Harrison Pensa IMMEDIATELY - and in no case later than February 9, 2011.
   
CONCLUSION

Like many class actions that are settled, this one raises as many questions or more than it answers. However, settlements that are in the interests of all parties are clearly preferable to protracted litigation. 

This settlement appears to result in the paying of a significant portion of money that has been owing for a long time. The settlement apparently works very well for the record companies, CMRRA/SODRAC and the many lawyers involved for all parties.

While the record companies are no doubt pleased that they have been able to “exploit now and pay later”, at an apparent discount, the ironies of this position are open for discussion in future policy and even legal confrontations. If these commercial enterprises can do this, can they in turn, wearing their copyright owner hats, henceforth continue to express outrage about non-commercial private use and to seek the right to collect disproportionate statutory damages from non-commercial users such as students and single mothers? Will the potential ironies of this approach affect the ability of other would be copyright claimants - such as Access Copyright - to credibly threaten large statutory damage awards in non-commercial contexts, such as educational institutions and governments, where non-clearance is bound to be inadvertent and anything but systematic?

Invariably last, but not least, are the artists and creators. Whether the terms are adequate for them - assuming that they know about it - will be decided very soon on February 15, 2011 in a Court in a Toronto court room. Any objections by them must be filed with class counsel by February 9, 2011.

HK