Tuesday, July 19, 2011

Ariel Katz's Reply to Access Copyright's Submission re Transactional Licensing Issue

Here is Prof. Ariel Katz's reply to Access Copyright's submission on the alleged refusal by Access Copyright ("AC") to issue transactional licenses to post-secondary institutions that prefer to operate outside the supposedly optional interim tariff.

He goes into competition law at length by way of response to AC’s lengthy submission on competition law. However, he urges the Board to refrain from making any ruling that is broader than necessary.

He states:

43. I am mindful of the Board's rather unusual admonition in its order of June 17, 2011 (with respect to my “encouragement” that the Commissioner of Competition be requested, pursuant to s. 125 of the Competition Act to participate in the consideration of the issue of transactional licenses) that “parties will refrain from commenting in any way on the above referenced encouragement”, and I will refrain from pursuing this encouragement at this
point. [footnote omitted]

44. Nevertheless, the competition law issues arising from this application alone are clearly very substantial and controversial. Indeed, the great length, detail and intensity of AC’s protest concerning the applicability of competition law to the issues currently at hand confirm the essential importance of such issues and belie the validity of AC's blatantly defensive posture with respect thereto. Therefore, in order to avoid all manner of potential controversy and delay, I respectfully suggest that the Board issue the most narrow possible ruling in this instance that would avoid any reliance on the Competition Act and which could possibly be construed as a precedent in competition law or as a regulated conduct defence.

45. I respectfully believe that my suggested remedy at the end of this submission, which is intended purely and simply to give effect to what the Board considered to be essential features of the Interim Tariff in this matter, would be just such a narrow result. This proposed remedy would achieve a limited but essential purpose without raising enormous, unnecessary and premature competition law concerns and without implying a regulated conduct exception.

He proceeds to suggest a specific remedy as follows:
2.4 Upon request of an Institution, every rightholder whose works
are part of Access Copyright’s repertoire, shall grant to the
Institution a license to make a Copy or Copies of a specific work
or works of that rightholder:
(a) the license fees and relate terms and condition for
such a license will be negotiated in good faith between the
Institution and the rightholder or an agent for the
rightholder. For the purpose of this section, Access
Copyright shall not be regarded as an agent or a
(b) a rightholder shall not unreasonably deny such
request by an Institution; and
(c) Access Copyright shall not prevent, discourage or
otherwise interfere with the grant of such licenses, and shall
not attempt, directly or indirectly, to influence the license
fees negotiated or the related terms and conditions.
2.5 Without prejudice to any other remedy available to it, an
Institution believing that a request pursuant to section 2.4 has beenunreasonably denied, or that the rightholder has not negotiated in
good faith (for example, by not responding or delaying responses,
or offering, having regard to industry practices and the
rightholder’s licensing practices in other contexts, unreasonable
license fees and related terms and conditions), or that Access
Copyright acted contrary to subsection 2.4(c), shall notify the
Board that it was unable to obtain a license under section 2.4.
(a) Upon such notification, the Institution will be deemed to
have been granted a royalty free license to copy the
requested work or works;
(b) the license referred to in subsection (a) shall stay in
force until the Board rules otherwise, upon an application
by the rightholder, and after being convinced that the
rightholder negotiated in good faith, that the license had not
been unreasonably denied, and that Access Copyright did
not act contrary to subsection 2.4(c).
2.6 For greater clarity, for the purposes of sections 2.4 to 2.6, a
rightholder with respect to a work means any person who has
authorized Access Copyright to act on his behalf for the purpose of
licensing his work or works, irrespective of whether that person is
the owner of the copyright or any other interest in it.

He then points out why the Board has jurisdiction to issue such an order in order to give effect to its interim tariff, which he earlier points out was very much predicated on the assumption – based on AC’s own submissions – that transactional licenses would continue to be available as required.

58. I would note that the Board clearly has jurisdiction to issue such a ruling as suggested because AC is nothing more, for present purposes at least, than the voice and arm of its members and affiliates. If these entities and persons have presumably authorized AC to collectively administer their copyrights, and to take the position it is now does, they have placed themselves clearly and squarely under the Board's jurisdiction, and voluntarily acquiesced to be bound, (with respect to the works they empowered AC to administer) by whatever licensing terms and conditions the Board determines necessary.

Once again, this is an important submission that should be read by all copyright law and competition lawyers and particularly by anyone interested in how these two areas of the law interact. Other potentially interesting submissions will no doubt be filed later today.


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