Possible Impact of Supreme Court Arguments in SOCAN Previews Case on Access Copyright Post Secondary Copyright Board Tariff Application

Prof. Sam Trosow, who is an expert in both copyright law and library science, is closely following all the current litigation and the Copyright Board hearing  impacting on fair dealing and education.

He points out in his blog from June 29, 2011 how the SOCAN “previews” case now unfolding in the Supreme Court of Canada could impact upon the post secondary tariff proceedings brought by Access Copyright now pending before the Copyright Board.

He points out that the positions being taken by CMRRA-SODRAC (“CSI”) and CRIA  in the Supreme Court are supportive of SOCAN on fair dealing. These parties are respondents in SOCAN’s appeal.

Prof. Trosow also states in his blog from yesterday that:

"What is raising more than a few eyebrows however is the fact that CRIA is now being represented by Glen Bloom (of Osler, Hoskin & Harcourt LLP) who substituted into the case for CRIA on May 31^st. Mr. Bloom, who also represented the plaintiffs in the CCH v LSUC litigation, is currently representing the Association of Universities and Colleges of Canada (AUCC), the lead objector in the tariff proceedings brought by Access Copyright now pending before the Copyright Board.

Without doubt, the breadth and scope of fair dealing will be a central dispute in that proceeding and will be a determinative factor in the amount of the tariff ultimately set by the Board.  Should the attempt by SOCAN, CRIA and CSI to limit the applicability of fair dealing be successful, there will be a profound impact on the direction and outcome of the Access Copyright Tariff proceedings"

 HK

Ariel Katz: AUCC makes Right Diagnosis but Prescribes Wrong Remedy re Access Copyright Transactional License Issue at Copyright Board

Prof. Ariel Katz, who is Canada’s leading expert in the interplay between copyright, competition and collective administration issues, has filed a very interesting and important submission at the Copyright Board. Below is part of what he has to say, which is posted on his blog, where a link to his entire submission can also be found.

Essentially, Prof. Katz takes issue simultaneously with both Access Copyright for its “monopolistic excess, abuse, and inequitable conduct” and AUCC for diagnosing the problem but asking for a solution that could “inadvertently backfire and serve the interests of Access Copyright to the detriment of Canadian academic institutions.”

Here’s a taste - and I strongly recommend anyone interested in any or all of the post-secondary tariff hearing, copyright law, competition law, Access Copyright, collectives generally and the Copyright Board should read his whole submission:

***************************
...

The AUCC’s Application draws a dim picture of monopolistic excess, abuse, and inequitable conduct.  It confirms that many of the concerns raised in the course of Access Copyright’s Application to grant the Interim Tariff have materialized.  The Board should intervene to rectify this problem.

Unfortunately, while the AUCC correctly diagnosed some of the problems, it asks to Board to prescribe the wrong remedy.  I am not persuaded that amending the Interim Tariff to require Access Copyright to grant transactional licenses on a per copy basis—as the AUCC requests—is the optimal remedy for these issues.  In fact, I am concerned that ordering Access Copyright to grant transactional licenses might actually—under some circumstances—aggravate the problem.  While I am confident that this was not the AUCC’s intention, I believe that the remedy that it proposes could inadvertently backfire and serve the interests of Access Copyright to the detriment of Canadian academic institutions.

Canada’s academic institutions need competitive alternatives to Access Copyright, not to enlarge its mandate.  They deserve to have the benefits of a competitive licensing marketplace, with competitive licensing practices, and competitive prices.  This marketplace is emerging and the Board should make sure that it continues to evolve despite occasional difficulties.  Extending the mandate of Access Copyright and installing it as the place to go for all licensing needs will not guarantee successful evolution of this emerging marketplace; it will ensure its stagnation.

Academic institutions need competitive alternatives to Access Copyright, not alternative offers from Access Copyright and ongoing expensive proceedings at the Copyright Board. ...

(emphasis added)

HK

CPCC Makes a Virtue of Necessity & How We "really don't know clouds at all"

(my fav "cloud" song)

 

A little ray of light has momentarily pierced the cloud of confusion about cloud music in Canada.

The CPCC (which is seeking a "tax" on memory cards and still "taxes" blank CDs and has tried without success to "tax" iPods) has announced that:

It is not our position that cloud-based music distribution systems should be subject to a private copying levy under the Copyright Act, and the CPCC will not seek to obtain levies for private copies of music made with cloud storage services.

It’s good to actually read this, even though it would seem incongruous that even the CPCC could regard “the cloud” as a “blank audio recording medium”. Here is their press release.   

But, then again, the CPCC tried and failed twice in the Courts to have iPods and other digital audio recorders - which are “devices” - treated as a “medium” so that they could be taxed. (Disclosure - I was involved in these battles both at the Board and in the Courts).

So, today’s announcement may be simply making a virtue of necessity.
       
But don't exhale just yet. One has little doubt that many of the stakeholders in CPCC will be thinking about seeking pieces of the “cloud” action through tariffs on performance, communication and reproduction - and not just for music but for sound recordings and performers’ performances as well. The thought of endless and expensive Copyright Board hearings is doubtless music to the ears of many lawyers.

Of course the Supreme Court of Canada and Parliament in the next copyright bill may have some things to say that could have a major effect on all of this. We’ll very likely know for sure by this time next year, more or less, on both fronts.

Whether the “cloud” brings a gentle, nurturing shower of innovation and music or a torrential and destructive typhoon of Copyright Board and judicial review proceedings to Canada remains to be seen.

 

One thing is for sure. Well have to look at music in the cloud "from both sides now".

HK

Righthaven "Troll" Litigation Could Take Toll on More Meritorious Claims

The widely criticized Righthaven copyright "troll" litigation campaign in the USA seems to be going down in flames. But it may cause a lot of collateral damage to plaintiffs that would evoke more sympathy and could conceivably set precedents that could work against more meritorious claims.

In the latest twist, Judge Pro of US District Court of Nevada has ruled that the fact that an entire work may be copied, while relevant to the issue of fair use, is not determinative that the use is unfair. Actual harm must be shown:

    Merely arguing that because [defendant] Hoehn replicated the entirety of the Work the market for the Work was diminished is not sufficient to show harm. Therefore, Righthaven has not presented evidence raising a genuine issue of material fact that the fourth factor favors a finding of fair use.   
   
    There is no genuine issue of material fact that the above factors favor a finding of fair use. Of the four factors, only the fact that Hoehn replicated the entire Work weighs against a finding of fair use. Hoehn used the Work for a noncommercial and nonprofit use that was different from the original use. The copyrighted Work was an informational work with only some creative aspects, and the Work was used for an informational purpose. Righthaven did not present any evidence that the market for the Work was harmed by Hoehn’s noncommercial use for the 40 days it appeared on the Website. Accordingly, there is no genuine issue of material fact that Hoehn’s use of the Work was fair and summary judgment is appropriate.                  

This may not be good news to many copyright owners - including perhaps those whose works are copied in the educational sector - whether in the USA or Canada...

HK

Official Notice of the CBC Summertime Hearings at the CRTC

The actual announcement of the forthcoming CRTC hearings on renewal of the CBC licences was published one level down on the CRTC website under “Today’s Releases” on June 17, 2011 under the captivating title of Broadcasting Notice of Consultation CRTC 2011-379.

My prediction on the timing and schedule - if not the if not the actual location of the announcement website - was accurate. My "informed sources" deserve an "A" grade - though not an "A+" this time.

This announcement should not be confused with the CRTC’s prominent front page portal leading to a special CRTC site concerning the CBC, which is apparently intended to provide the opportunity of “consultation” for those who wish to make such points as:

●    i don’t watch cbc i don’t like it and i wonder why i should have to bankroll what they want to do, especially when they are very biased against the montreal canadiens

●    The CBC should be disbanded or sold! They are so outdated and so very Eastern biased that they have no use whatsoever in a modern Western Canada. The exhorbident money spent on useless garbage programming especially French in Western Canada is a giant waste of taxpayers dollars. Get rid of the CBC forever!

These are actual comments, with which I obviously disagree. There are already hundreds of other comparably incisive, constructive  - ;-) - and mostly anonymous offerings - and it’s only day 3. There is even a very elaborate YouTube video presentation about the CBC, complete with dramatic synthesized music.

For those who wish to provide more traditional submissions, here are the deadlines:

Broadcasting Notice of Consultation CRTC 2011-379

Ottawa, 17 June 2011

Notice of hearing

12 September 2011
Gatineau, Quebec
Licence renewals for the Canadian Broadcasting Corporation’s French- and English-language services
Deadline for submission of interventions/answers: 18 July 2011
Deadline for postings to online consultation: 18 July 2011

Interested potential interveners who wish to put together a reasoned and professional quality brief have exactly one month in the summertime to do so. That includes finding coalition partners if necessary, arranging funding if necessary, retaining experts if desired, and the other things that are likely to be required to make essential points in this instance. The requirements for a full intervention are set forth here.

There are actually 11 (eleven) different appellations. Therefore, some interveners may need to respond to several of these different applications.

The CBC has had all kinds of time and all kinds of money to prepare for this. By remarkable coincidence, the CBC released just this week of a report from Deloitte & Touche that purports to show that the taxpayers’ subsidy of $1.1 billion per year yields benefits of $3.7 billion per year by way of “gross value added” to the Canadian economy though “multiplier effects.”

Ironically, the report is so locked down with Adobe security that one can’t even cut and paste helpful excerpts from it, which I would otherwise gladly do. Oddly enough, the French version of the report is not presented in lock down mode. Is this a new development in official languages policy in Canada? One hopes that English language Canadians will have the same access as Francophones to this document in due course.

The disclaimer is rather striking - but alas I can’t cut and paste from it. Essentially, it says that the report was based mostly upon information provided by the CBC that is not audited or verified and is only for use by the CBC and should not be relied upon for any purpose by anyone else. According to the CBC, President Hubert Lacroix of the CBC “refused to disclose what the study itself cost”.   

Then there’s the Nordicity report conveniently released in April of 2011 which shows how the CBC receives very little taxpayers' money compared to other public broadcasters in the developed world.

There can be little doubt about one thing at least. The multiplier effect of public funding for the CBC is certainly working well in the consulting sector in Canada.

HK

Copyright Board Does Not Want to Hear from Commissioner of Competition At This Stage re Access Copyright

The Board has responded to Prof. Ariel Katz's suggestion that the Commissioner of Competition be requested, pursuant to s. 125 of the Competition Act,  by the Board to participate in the upcoming consideration of the issue of transactional licenses. The Board has indicated that it will not do so because this would be "unhelpful and disruptive".

Here is the Board's order from this afternoon. This, of course, is not necessarily the end of the matter. In principle, at least, the Commissioner can request to intervene and the Minister can even require her to do so and that she be heard.

As I indicated earlier, the schedule has been extended.

From: "Gilles.McDougall@cb-cda.gc.ca" <Gilles.McDougall@cb-cda.gc.ca>
Date: Fri, 17 Jun 2011 16:57:49 -0400
To: XXXXXXXXXXXXXXX
Subject: Access Copyright Post-Secondary Educational Institutions Tariff (2011-2013)

ORDER OF THE BOARD
The June 15, 2011 "encouragement" from professor Katz that the Commissioner of Competition be asked to participate in the examination of the June 8, 2011 application by the Association of Universities and Colleges of Canada for the addition of a transactional licence in the Access Copyright Interim Post-Secondary Educational Institution Tariff, 2011-2013 is noted.


The Board is aware of section 125 of the Competition Act. Any resort to this provision in these proceedings would have to be at a much later stage, such as once the evidence and arguments of the parties have been filed. Asking the Commissioner to participate in the examination of an application to amend an interim tariff would be both unhelpful and disruptive.


It would be unhelpful because the Board’s policy with respect to interim tariffs in general, and this interim tariff in particular, is first and foremost to extend the status quo unless convinced to do otherwise. Some may wish to argue that the very state of affairs existing before the interim tariff was put in place raised competition issues. To the extent this is even relevant at this stage of the process, it can be addressed on the basis of the parties’ submissions.


It would be disruptive because interim matters should be dealt with "in an expeditious manner on the basis of evidence which would often be insufficient for the purposes of the final decision." [Bell Canada v. Canada (Canadian Radio-Television and Telecommunications Commission) [1989] 1 S.C.R. 1722] The participation of the Commissioner would achieve the opposite.

Considering the above, parties will refrain from commenting in any way on the above-referenced encouragement.

Gilles McDougall
Secretary General | Secrétaire général
Copyright Board of Canada | Commission du droit d'auteur du Canada
56 Sparks, Suite| Bureau 800
Ottawa ON K1A 0C9
Telephone | Téléphone 613.952.8624 begin_of_the_skype_highlighting            613.952.8624      end_of_the_skype_highlightingGilles.mcdougall@cb-cda.gc.ca

(emphasis added)

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

HK

Katz Time Extension Request Granted: Copyright Board Extends Schedule re Transactional Licence Issue

This order was just issued by the Board:

From: "Gilles.McDougall@cb-cda.gc.ca" <Gilles.McDougall@cb-cda.gc.ca>
Date: Thu, 16 Jun 2011 17:29:46 -0400
To: XXXXXXXXXX
Subject: Access Copyright Post-Secondary Educational Institutions Tariff (2011-2013) - Application to amend interim tariff 

NOTICE OF THE BOARD

Mr. Katz's request of June 15, 2011 to extend the time for responding to the AUCC application regarding transactional licences is granted. Accordingly, today's deadline to reply to AUCC's application is extended in the following way:

Objectors' response on the AUCC's application: by no later than Monday, June 27, 2011. ACCC will be allowed to add to its response of today.

Access Copyright's response to objectors' submissions and AUCC's application: by no later than Friday, July 8, 2011.

AUCC and other objectors' reply: by no later than Tuesday, July 19, 2011.

Gilles McDougall
Secretary General | Secrétaire général
Copyright Board of Canada | Commission du droit d'auteur du Canada
56 Sparks, Suite| Bureau 800
Ottawa ON K1A 0C9
Telephone | Téléphone 613.952.8624Gilles.mcdougall@cb-cda.gc.ca

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

HK

Copyright Board and the Commissioner of Competition? Expect the Unexpected

Access Copyright (“AC”), whether intentionally or not,  has thrown down the gauntlet regarding the role of the Competition Act and the Commissioner of Competition in the current post secondary tariff application in particular and Copyright Board proceedings generally.

Prof. Ariel Katz - a participant in this proceeding - has taken up the challenge in this very important filing with the Copyright Board. He is Canada’s leading scholar in the interplay between IP and competition law. Here is his own posting on this submission.

I have previously mentioned that AC’s refusal to issue transactional licenses to universities could arguably amount to a refusal to deal or an abuse of dominant position, contrary to the Competition Act. See here and here.

Prof. Katz  also makes this point and goes on to raise the possible application of s. 45 of the Competition Act, which deals with "conspiracies, agreements or arrangements between competitors."

Prof. Ariel Katz has boldly and rightly asked the Board to request the participation of the Commissioner of Competition pursuant to s. 125 of the Competition Act, which seems to have been enacted precisely for moments such as this.    

This is what the Competition Act says:

125. (1) The Commissioner, at the request
of any federal board, commission or other tribunal
or on his own initiative, may, and on direction
from the Minister shall, make representations
to and call evidence before the board,
commission or other tribunal in respect of competition,
whenever such representations are, or
evidence is, relevant to a matter before the
board, commission or other tribunal, and to the
factors that the board, commission or other tribunal
is entitled to take into consideration in determining the matter.

Despite the clear intention of Parliament, the involvement of the Commissioner of Competition in the proceedings of other tribunals in Ottawa is a rare and delicate matter. I would be surprised if the Board were to welcome - much less request - such participation, as Prof. Katz quite logically and diplomatically asks.

But I always like to be pleasantly surprised.

And - the above provision clearly indicates that the Minister (meaning the Minister of Industry) can require such participation.

The Commissioner of Competition has never before become involved in a Copyright Board proceeding. Perhaps it is time.

Keep an eye on this. Things could evolve very quickly and unexpectedly.

And hopefully positively.

HK

CBC at the CRTC: Summertime and the Hearings are Easy (for the CBC)

It is well known fact in Ottawa that the usual best way to keep a secret it to publish it in the Canada Gazette. And even better, to do so in the summer. That is precisely what is about to happen in the matter of the long awaited CBC licence renewal process at the CRTC.

Informed sources suggest that we may expect a notice to be published - probably this week - in the Canada Gazette with a deadline for the public to file interventions by the end of July and hearings following quickly in the second or third week in September. 

So, the CBC has had all the time it could want to get ready for this moment and to prepare for it using taxpayers’ dollars. The CBC will tell us what a great job it has done in changing and challenging times with its modest $1.1 billion subsidy and how it could do even better with more money and stable guaranteed funding.  By sheer and remarkable coincidence, the CBC has just released a report from Deloitte saying that it has contributed an overall $3.7 billion to Canada’s economy in 2010. Here's the report. Here's the CBC's report on the Deloitte report, which says that "[CBC President] Lacroix says the CBC does not intend to ask for an increased allocation in the period leading up to 2015."

On the other hand, to the minimal extent that there will be awareness of the renewal hearing,  the public will have to prepare their comments and objections and make arrangements to appear at the hearing over the summer  - all on their own time and their own dime. Many concerned groups, knowing that the CRTC cannot conceivably refuse to renew the CBC’s licence entitlement, may simply give up or boycott the process.

But there is good reason to intervene. The CRTC could remind the CBC what its role is and suggest and, perhaps even impose, some requirements and conditions.

The Government will read the CRTC’s decision with great interest, While the Government must not interfere with CBC's "journalistic, creative or programming independence", the Government does retain control of three very important elements. These are:
•    the appointment of the President
•    the appointment of members of the Board of Directors
•    the amount of taxpayers’ subsidy.

Therefore, interventions made to the CRTC could prove very influential. These hearings come at a crucial and perhaps even existential crossroads for the CBC. There has been drastic change at the CBC under the current president and his predecessor. There is a lot of discontent about this change, which is not surprising. What is good about the change and what is bad? Can mistakes and bad judgment calls - and there frankly were many - be undone? Does the CBC have a future? What should that future be and what can be learned from the past? Should the CBC be competing with  commercial TV and Radio for bigger audiences? Or should it go back to its more arts-oriented and sometimes “elite” past and do the things that other broadcasters can’t or won’t do but which must be done for the public good? Some types of cultural activity and informational services will always require some degree of subsidy.

The CBC’s raison d’être, according to the Broadcasting Act is:

“the Canadian Broadcasting Corporation, as the national public broadcaster, should provide radio and television services incorporating a wide range of programming that informs, enlightens and entertains”

Therefore, it would be a good idea for those concerned with Canadian culture to put together compatible coalitions of credible organizations and interested high profile individuals to get ready, pool available resources, and to focus on well orchestrated, high quality and effective interventions. This is already starting to happen.

HK

Now SOCAN Seeks Interim Internet Tariff. Who’s Next? Will CPCC Seek Interim Tariff for its Proposed "Memory Tax"?

When the Copyright Board - just hours before Christmas of 2010 when Christmas came early to Access Copyright - awarded Access Copyright an interim tariff worth about $48 million over three years, it was perfectly predictable that this would be a precedent that - even if not strictly speaking a legal precedent because the Board is not a Court - would be a loose canon. The fact that AUCC - with its enormous budget for the current board hearing - and others with less but still substantial means - did nothing by way of an apparently easily successful and relatively (compared to the Board proceedings) very inexpensive judicial review application was very disappointing, to put it mildly, to many.


Well, the next broadside shot has now been fired by SOCAN, which wants its turn at an interim tariff. See here and here SOCAN’s application) and here (SOCAN’s pres release). This interim tariff follow up comes even sooner than expected. Naturally, it relies on the Access Copyright Christmas decision.


I’m sure that the CPCC also is now getting big ideas about an interim tariff for its proposed memory tax proceeding, if that goes forward.


In its Tariff 22 proceeding that goes back to 1995, SOCAN is now suddenly asking for an interim tariff on the parts of it that now supposedly relate to audiovisual webcasts and user generated content ("UGC").


SOCAN's proposed interim application appears at first blush to be even less reasoned and substantiated than Access Copyright's controversial interim tariff application that was approved on December 23, 2010 - just 18 hours before Christmas - on the basis of no actual “evidence”, such as an affidavit not based on hearsay, that would pass muster in a court. That said, the absence of evidence and other major gaps in its case did not hurt Access Copyright - and no judicial review was sought, as I keep saying. See my blog around that time for numerous comments.


In this case, there could also be substantial legal issues involving jurisdiction and extraterritoriality, not to mention liability. And the expected legislation that will likely receive fast passage in this majority Government in the next year could profoundly affect this tariff - at least re re UGC. This potentially and explicitly targets such entities as Netflix, Apple TV, Sony. Facebook, and last - but hardly least - YouTube - which is owned by Google. These are potentially fierce foes that may not be amenable to the vicissitudes of the Copyright Board process, which often include notoriously unnecessary and intrusive but still mandatory interrogatories and time frames that unpredictably range from delays of several years to extremely tight deadlines of a few days. They may not welcome an interim tariff on the basis that it “would give businesses some assessment of the royalty payments necessary to run their operations” as SOCAN’s press release suggests.


It will be fascinating to see how these entities - or the associations of which they are members - respond to this. I suspect that they will not be pleased.


This maybe be another illustration of why it's little wonder that Canada is deprived of innovative internet roll-outs due to multiple and highly redundant layers of rights imposed by the Copyright Act and implemented by the Copyright Board, which takes pains to value each of them separately and make them cumulative. And, except for occasional “consolidation”, each of these rights gets a separate hearing. And, unlike the USA, Canada has “neighbouring rights”, which means more or less doubling and duplicating everything that SOCAN does. A consolidated hearing is not necessarily a simpler or cheaper hearing. They can become very complicated and not always save money for all parties. In some cases, consolidation can create considerable additional costs for a party with a very narrow issue and interest.


Canada - as an economic unit - is not obviously any larger or economically more enticing to these giant foreign companies than California, which has a population of 4 million or so more than Canada. The marginal regulatory cost of entry into California for these companies is zero. In Canada, it's enormous - at best - and could obvious be deal breaker at worst. There is even talk of forcing Netflix to face the CRTC.


Why would any rationale entity pay potentially millions of dollars in legal fees and disbursements to be required years from now to pay large tariffs retroactively for rights that that don't even exist in the USA - and now maybe have to pay an “interim tariff’ in the meantime that may not ever be effectively refundable?


Why bother?


Michael Geist makes a similar point about Apple’s iCloud service. I’m sure that the Canadian collectives are salivating at the prospect of the clouds coming to Canada. Even if it turns out that there are good jurisdictional and other arguments to keep the collectives and the Copyright Board at bay, these services may have to potentially spend six or seven figures to do so. It’s easier and likely  more economically rationale to just block Canada, as Pandora, Hulu, etc.  have done to date.  And doubtless many others more to come.


With:
• legislation that is already far more generous in most ways to copyright owners and more costly to users than American legislation;
• bandwidth caps;
• throttling; 
• enormous Copyright Board and even potentially CRTC hearing costs; and,
• now the prospect of interim tariffs at the Copyright Board -


It's no wonder that Canada is slipping quickly into the internet and innovation rearguard.


HK

Access Copyright & Transactional Licenses - The Goose and the Gander?

As I outlined here on June 9, 2011, AUCC filed a request to the Copyright Board to amend the interim tariff that was awarded to Access Copyright ("AC") just hours before last Christmas.  AUCC is concerned that AC is allegedly now refusing to issue "transactional" licenses, i.e. licenses for one or a limited number of works at a time. This precise point had been foreseen and an appropriate order had been sought by Athabasca University at the time of the submissions on the interim tariff. None of the institutional objectors sought judicial review of the interim tariff. However, now that a pattern of refusal appears to be emerging, the problem is being confronted. 


Less than 24 hours after AUCC’s request was emailed, the Board responded as follows.


From: "Gilles.McDougall@CB-cda.gc.ca" >
Date: Thu, 9 Jun 2011 14:04:39 -0400
To: XXXXXXXXXXXXXXXXXXXXX
Subject: Access Copyright Post-Secondary Educational Institutions Tariff (2011-2013) - Application to amend interim tariff

NOTICE OF THE BOARD


Parties have until Thursday, June 16, 2011 to reply to AUCC's application. AUCC can file a response by no later than Thursday, June 23, 2011.

Gilles McDougall
Secretary General | Secrétaire général


Copyright Board of Canada | Commission du droit d'auteur du Canada
56 Sparks, Suite| Bureau 800
Ottawa ON K1A 0C9
Telephone | Téléphone 613.952.8624
Gilles.mcdougall@cb-cda.gc.ca


This very tight schedule comes just as the participants are filing responses to interrogatories. Some participants have requested extensions of time from AC to do this. And it turns out that the responses of perhaps as many as 80% - 90% or so of the institutions were really not necessary.


This tight reply and response (or should that be response and reply?) schedule does not seem to allow much time to consider competition law issues - which readily come to mind in this situation. Competition law is rarely simple and straightforward - and jurisdictional issues are quite foreseeable in this instance. 


Sometimes, the Board moves quite slowly. But when it moves quickly, it does so very quickly. This file has been moving very quickly by any measure. 


From AC’s point of view, the need for speed is not obvious - since it has its interim tariff worth about $48 million over three years.


From the objectors point of view, a quick remedy regarding transactional licenses would be desirable to enable them to obtain licenses when but only when  necessary and to be thereby be compliant with copyright clearance principles - despite AC’s apparent efforts to frustrate such compliance and to renege on its long standing practice and that of the publishing trade generally of granting such licenses. I mention again but leave aside the interesting question of whether AC or a publisher could enforce any copyright rights against an institution who tried in good faith to get a transactional license but was refused in circumstances that are held to amount to abuse or misuse of copyright. 


The possible emergence of a major new issue that allegedly involves “gross abuse” and apparently involves potentially complex competition law issues could profoundly change the dynamic and the schedule of this file. Moreover, two cases will be heard by the Supreme Court in December that could profoundly affect the current state of the law on “fair dealing” as enunciated by the Copyright Board and the Federal Court of Appeal. The effect on this potential tariff could be enormous. The Supreme Court of Canada usually renders its judgments within about six months of a hearing. So - by this time next year, we should have a much more definitive and possibly quite different understanding of how fair dealing functions in the educational context.


The nature of this particular tariff application could profoundly change as a result of the Supreme Court decision and it may transpire that much work that was done in the meantime on this file could turn out to have been unnecessary or may need to be redone. 


Not to mention that we probably will have new legislation by a year from now that could also affect this proposed tariff. 


Maybe what’s needed now is an another quick “interim” decision requiring AC to issue transactional licenses. As they say, “what’s sauce for the goose is sauce for the gander”. And then, a halt in the proceedings until we have heard from the Supreme Court of Canada about a year from now. 


HK

Access Copyright Compares Itself to Government Tax Collector & Rewrites Copyright & Competition Law Principles

Michael Geist alerts us to an astonishing announcement by Access Copyright (AC). 

It would appear that AC has just unilaterally re-written some basic aspects of copyright and competition law, not to mention basic economics. It’s an extraordinary statement, presumably  in response to Michael and my recent posts and AUCC’s letter to the Copyright Board.

AC says that:

The application of any mechanism designed to encourage and facilitate respect for copyright has to make sense, or nobody will use it. The enormous investment the Canada Revenue Agency has made to facilitate tax filing is all about ensuring compliance by making it easy. The assumption is always that most people will do the right thing if you don’t put impediments in their way. The same holds true with licensing.

Transactional licences for secondary uses of works are often not suited to the demands of the new digital economy. Impractical to implement and costly to administer, they have the added weakness of being unable to capture uses that should be compensated. They do not ensure that all secondary uses are legal, on the contrary, their very impracticality is an incentive to infringe.

A comprehensive licence, on the other hand, is a fast, easy and cost-efficient way to clear copyright protected works. It ensures that uses of works are cleared and tracked in a consistent and structured way. As always, publishers also have the option to clear the rights themselves directly with educational institutions, in accordance with their individual business interests.

(Emphasis added)

First, the reference to “The enormous investment the Canada Revenue Agency has made to facilitate tax filing ...” is ironic at several levels. It’s true that many regard AC as a tax collector. The only problem is that it is a self-appointed tax collector and, unlike CRA, its systems largely don’t work. If nothing else, this is an interesting admission.

The AC declaration makes no legal or economic sense. It ignores fundamental legal, economic and antitrust axioms:


1. IP owners have exclusive rights, which are normally dealt with in transactions with users. Doing something without permission for which permission is required entails infringement. Transactions may be virtually automatic, such as the sale of a book or a CD. Or they may be highly complex and intensely negotiated, such making a feature film. But their essence is that they are individual transactions. If I go into CD Warehouse or online to iTunes to buy Leonard Cohen’s latest album, I will not be forced to buy the entire store or online catalogue in order to buy one album.


2. Collective exercise of these rights is inherently anticompetitive and virtually all sophisticated countries provide oversight mechanisms to ensure that collectives do not abuse the extraordinarily anticompetitive and in many cases even monopolistic power exceptionally allowed to them. Collectives are an exception to the normal principles of antitrust law, which may be more tolerant than it once was about IP misuse and abuse. However, today’s declaration may provoke reaction from the watchdogs who have been waiting to push back the antitrust pendulum in respect of IP in Canada.


3. One of the first thing every law student learns is “nemo dat quod non habet” -  you can’t give what you don’t have. It’s difficult to imagine how AC could have any chain of title to a vast amount of the “repertoire” needed in any university. And much of what is now used is already paid for through licenses or doesn’t require payment - i.e. is fair dealing or is in the public domain. AC has been unable or unwilling to provide evidence of its actual repertoire to date. Given all of this, it’s particularly astonishing for it to insist that universities either pay for it all (whatever “all” may be) or get nothing.  To the limited extent that “blanket licenses” are legally and economically justifiable in Canada, there must be a large enough actual repertoire to justify such licenses. We don’t have “extended collective licensing” in Canada, no matter how much AC may wish that it were so.


“Respect for copyright” should entail behavior consistent with basic legal and logical principles and norms. Collectives, too, are bound by copyright law. Users, too, have copyright rights.

AC has just effectively filed a declaration of independence from such ground rules in stirring language , viz:

Transactional licences - licences issued on a pay-per-use basis - were more effective as a business model for secondary uses of published works when paper ruled the world of publishing and copying. Transactional licences were a practical alternative when copying was centralized and compliance was easily monitored. This is no longer the case.

(emphasis added)

This astonishing declaration - and indeed confession and admission - cries out for appropriate action. All eyes now on the institutional objectors and the Copyright Board to see what’s next.

Here’s a hint of what may be worth considering. In view of these recent developments concerning  transactional licenses and the lack thereof, and the two pending cases for which leave has been granted  in the Supreme Court of Canada that go to the root of fair dealing, should thought be given to a stay of the Copyright Board hearings? 


And, BTW, AC’s refusal to issue transactional licenses could be a very interesting and important issue in any litigation involving material for which a request for transactional license has been refused.  My understanding is that many publishers  are referring such requests to AC, which then refuses to deal, as the Competition Act so nicely puts it.


I should remind readers that, apart from suing small corner mom & pop type copy shops, AC’s copyright litigation record shows no victories of which I am aware against any institution, individual or large established corporate defendant in Canada. It has just made its odds of success in any infringement action connected with an academic environment even lower than before. 


HK

Leaves to Intervene Granted in SOCAN Previews Case

The Supreme Court of Canada has today June 10, 2011 granted leave to intervene to the four parties that so requested, namely CIPPIC, CAUT, Federation of Law Societies et al, and the Computer and Communications Industry Association.

The Court has, somewhat unusually, limited each of the interveners to a factum of no more than 10 pages in length. The usual length permitted is 20 pages.

As usual, requests to present oral arguments have been deferred.

HK

AUCC complains to Copyright Board re AC Refusal to Provide Transactional Licenses

In the Access Copyright quest for a 1,300% increase in its post secondary tariff, Athabasca University - one of Canada’s smallest but definitely most innovative universities and bravest advocates - initially put forward some of the strongest arguments against the tariff and - particularly the very controversial so-called “interim” tariff that is likely to last for at least three years and to cost taxpayers and students about $48 million as I have earlier explained. After the objectors lost the battle on the interim tariff and it was clear that there would not even be an attempt at judicial review, Athabasca eventually stopped filing its own submissions, and threw its lot in with the AUCC, to which it had contributed its portion of an approximately $2 million budget to fight this tariff. 

Athabasca had pointed out to the Board on several occasions in connection with “interim” tariff application that AC should at least be required to continue to provide “transactional” licenses so as to facilitate an institution’s presumably voluntary choice to clear material only when such clearance was necessary without being forced to sign on for more repertoire, more rights and more money than was necessary and that AC may have lacked the power to license in any case. Ariel Katz, who also provided cogent and forceful arguments, had similar submissions related to the need for continuing the status quo of voluntary transactions, given that the Board supposedly did not intend that the interim tariff be mandatory. The Board declined Athabasca’s very reasonable request regarding transactional licenses.

To the surprise and disappointment of some, neither of the main objector associations, namely AUCC and ACCC, sought judicial review of the interim decision, despite their apparently vigorous protest against it and despite what appeared to be arguably solid grounds for review. Contrary to beliefs held by some, this ruling arguably went well beyond a mere fact finding and procedural exercise by the Board. It was eminently reviewable and reversible in my view. It may be that the decision not to seek judicial review - which is normally quick and relatively inexpensive - was motivated more by practical and political rather than legal reasons. The interim tariff provided institutions with the comfort of the status quo, if they chose to use it, and the ability to pass the costs along to the students anyway to a very large if not total extent.

So, armed with the Board’s refusal to impose a requirement for transactional licenses, as explicitly and reasonably sought by Athabasca, AC is now entirely predictably as foreseen by Athabasca, allegedly refusing to issue such licenses. Whatever the motivation for this refusal, the result is pressure on institutions to sign on to the supposedly voluntary interim license.

After many copyright administrators have complained privately about AC’s refusal to issue transactional licenses, and Michael Geist made this public,  AUCC is now protesting this to the Board and asking the Board to amend the interim tariff. AUCC relies on Athabasca’s and Ariel Katz’s earlier submissions. Here is AUCC’s submission, which states that “this tactic is a gross abuse of the collective administration of copyright and an improper use of collective monopoly power.”

If the Board does not provide appropriate relief here very quickly, some may wish to consider seeking remedies under the Competition Act, or persuading the Commissioner of Competition to intervene in this proceeding.  There is also a procedure whereby any “six citizens” can effectively force the Commissioner to launch an “inquiry” into an issue. Competition law and procedures are quite complex - but potentially the Commissioner will take on appropriate cases and fight them at taxpayers’ expense. Here, there may be good reasons to think about whether there is an illegal  “refusal to deal” or an illegal “abuse of dominance”, and if so, what should be done about it.

If the Copyright Board does not provide a remedy rather quickly, the Competition Act may prove to be an interesting and fertile potential resource since this “interim” tariff could last for several years, given the usual rate of proceedings at the Board and likely subsequent judicial review.

The Commissioner of Competition - despite an explicit statutory invitation which is really not necessary - has never before become involved in a Board hearing or file. Perhaps it is now time. Better late than never. 

HK

Copyright Board Ruling re Interrogatories in Access Copyright Post Secondary Proposed Tarifff

The ruling below on interrogatories was issued by the Board on Monday, June 6, 2011.

Many universities and colleges will be particularly interested in the following part (full ruling below):

ACCESS INTERROGATORIES TO ACCC/AUCC
General comment: the volume of information Access requests is largely a result of the breadth of issues raised by the objectors. That being said, parties are reminded that the Board does not need all existing relevant information to set fair tariffs. The associations should provide a reasonable amount of relevant information, from a reasonable number of institutions, preferably identified with the concurrence of Access. The institutions will in turn be required to make reasonable inquiries from staff.

(emphasis added)

The Board is being consistent. It has long been the practice of the Board in hearings involving radio and TV, for example, not to require answers from each of the hundreds of affected members of the objector  association. A representative sample has sufficed.

The ruling comes only a week before interrogatory answers are due on June 13, 2011. Unfortunately, it only now appears that a very large number of universities and colleges may have spent an incalculable amount of time providing answers that could turn out to have been unnecessary. Even the smallest of the two hundred or so affected institutions has probably spent hundreds of person/hours on this process. One can only imagine the resources put in by the larger ones. 

All this during the months of May and June when Canadians usually prefer to concentrate on gardening and hockey...


HK

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

From: "Gilles.McDougall@cb-cda.gc.ca" <Gilles.McDougall@cb-cda.gc.ca>

Date: 6 June, 2011 4:35:36 PM EDT

To: XXXXXXXXXXXXXXX

Subject: Access Copyright Post-Secondary Educational Institutions Tariff (2011-2013)

RULING OF THE BOARD

AUCC/ACCC INTERROGATORIES TO ACCESS

Q. 14, 15, 16: Access shall provide what it has, in the form it has it. If the list of 220,000 or more works alluded to in the associations’ reply does not exist, Access shall provide any document on which the claim made on the web site was based.

Q. 34, 35, 36, 38, 39: the objection is dismissed. The fact that information requested is in the possession of the other party is not in itself relevant. This is all the more true when, as is the case here, information may or may not be in the possession of someone else than the party itself. With respect to Q. 39, it is not the Board’s practice to require a party to provide information beyond the date on which a question is addressed, even if the information is highly relevant.

ACCESS INTERROGATORIES TO ACCC/AUCC
General comment: the volume of information Access requests is largely a result of the breadth of issues raised by the objectors. That being said, parties are reminded that the Board does not need all existing relevant information to set fair tariffs. The associations should provide a reasonable amount of relevant information, from a reasonable number of institutions, preferably identified with the concurrence of Access. The institutions will in turn be required to make reasonable inquiries from staff.

Q. 3/3: the objection is dismissed. Information concerning institutions that do not avail themselves of the interim tariff is relevant and shall be provided, subject to the general comment above. Institutions who resist providing information should be reminded of the Board’s powers pursuant to subsection 66.7(1) of the Copyright Act.

Q. 10/10, 49/50, 88/89, 103/104: the questions as reformulated shall be answered. The objectors made the issues relevant. Questions about the use of licensed databases are relevant to determine the extent to which institutions can credibly operate without the Access repertoire.

Q. 63/64, 64/65, 78/79, 79/80, 98/99, 99/100: since all Access wants to know is if these systems make copies and if so how, the questions shall be answered accordingly.

Q. 70/71, 80/81: given the reply of Access, the question shall be answered by identifying the platforms and by providing information concerning copies made for mobile devices operation and how they differ from non-mobile counterparts.

Q. 87/88, 125/126: the objection is dismissed, for the reasons given by Access.

Q. 121/122: the objection is dismissed.

Q. 129/130, 130/131: the question as reformulated shall be answered. Again, institutions are only required to make reasonable inquiries and to provide a reasonable amount of relevant information.

Q. 21/22, 22/23, 23/24, 25/26, 28/29, 31/32, 32/33, 36/37, 44/45, 47/48, 48/49, 50/51, 62/63, 65/66, 66/67, 67/68, 83/84, 84/85, 95/96, 96/97, 101/102, 111/112, 113/114, 114/115: AUCC, ACCC and their members are ordered to respond to the interrogatory.

Q. 38/39, 54/55, 55/56, 57/58, 59/60, 60/61, 72/73, 73/74, 74/75, 76/77, 85/86, 89/90: AUCC, ACCC and their members are ordered to respond to the interrogatory. If a contract specifies that information may only be disclosed with the consent of the contractor, AUCC and ACCC shall identify the existence of the contract and supply the names of the parties to the contract. Access will hold the interrogatory in abeyance until it can determine whether it considers that other contracts supplied in response to the interrogatory contain a representative sample of the information requested. If so, no further answer shall be required. If not, Access shall apply to the Board for directions.

Q. 53/54, 71/72, 81/82, 105/106, 106/107, 107/108, 108/109, 117/118, 119/120: the interrogatory shall be held in abeyance pending negotiation of a survey.

Gilles McDougall
Secretary General | Secrétaire général
Copyright Board of Canada | Commission du droit d'auteur du Canada
56 Sparks, Suite| Bureau 800
Ottawa ON K1A 0C9
Telephone | Téléphone 613.952.8624 begin_of_the_skype_highlighting            613.952.8624      end_of_the_skype_highlightingGilles.mcdougall@cb-cda.gc.ca

“Yes” to Common Sense and “No” to Unnecessary Experts

Leonardo's Mona Lisa is an acclaimed "masterpiece". But what about use of the term "masterpiece" in relation to retirement homes?

Is Masterpiece the Art of Living confusing with Masterpiece Living, when the marks are used by different entities in relation to same thing, namely retirement homes?   

A recent decision from the Supreme Court of Canada penned by Justice Rothstein has intrigued trade-marks lawyers who are asking to what extent it may change Canadian trade-marks law, for example by opening the door to the American “initial interest confusion” doctrine, which tolerates a degree of initial or temporary confusion that is eliminated before a purchase is made, and weakens the notion that consumers of expensive goods and services are less easily confused.

However, the more immediate impact of the decision may be apparent in procedural and evidentiary issues and even outside of trade-marks cases and may result in:

•    less work for “expert” witnesses
•    lower costs for litigants
•    a rediscovery of “common sense” in the court room and at “expert” tribunals.

There is long discussion about expert witness evidence that was unnecessary in this case and based upon wrong legal assumptions and may therefore have “diverted the trial judge from the correct legal test to apply when judging confusion”.  Justice Rothstein reminds us of the need to keep litigation costs down and that unnecessary expert evidence should not be admissible. He specially charges case management judges and prothonotaries to "assess the admissibility and usefulness of proposed expert and survey evidence at an early stage so as to avoid large expenditures of resources on evidence of little utility,"  

This is very important because parties with a big litigation budget have been known to intimidate and prevail over parties with a smaller budget through the use of unnecessary (never mind non-independent and even not properly "qualified") “expert” testimony that it may be risky not to counter.

Justice Rothstein reminds us that in a case such as this, where a correct confusion analysis does not require expert evidence about “morphology, semantics, rules of grammar and conventions of expression”, judges should just use their “common sense” and exclude such evidence if it is not needed.

He also reminds us other mandatory rules of evidence when it comes to “experts” as set forth by the Supreme Court in 1994 in R. v. Mohan. These rules apply to all cases.

I would imagine that some of my colleagues who practice before the Copyright Board and, indeed the Board itself, will find this decision to be of significant interest.

HK