AUCC Follows UofT & Western and Capitulates to Access Copyright’s Copyright Bullying – And It Still “Ain’t Over”

As predicted by Sam Trosow and myself, about two months ago, AUCC (Association of Universities and Colleges Canada) has now capitulated to Access Copyright (AC) on the post-secondary Copyright Board case by agreeing to a "model license" that is similar to the disadvantageous deal (from the academic standpoint) signed onto by UofT and Western. Here is the AUCC "model license".  Here is the "Limited Time Offer of Discounted Pricing onRetroactive Payments".

And, even though this is being called a “negotiated settlement” by AUCC, the Copyright Board proceeding is going to continue anyway with AUCC apparently intending to remain involved. And it’s hard to see how things won’t get even worse in that proceeding. This is not normally how settlements are done – even at the Copyright Board.

The deal represents about a 50% (or even an 800% based upon the existing minimum rate) increase over the current rates, which should have gone significantly down rather than up after the 2004 CCH v. LSUC decision.

Here’s Sam Trosow’s first take on this, as well as that of Ariel Katz.  Also, that of CAUT, which represents university teachers and Michael Geist.

It would now appear that that those three dozen or so brave institutions  who were bold enough to actually challenge Access Copyright by “opting out” of the Copyright Board’s controversial interim tariff,  have now not only been pre-empted by the controversial settlement by UofT and Western, which are two very important institutions. They have now effectively been thrown under the AC bus by AUCC itself. This is because it would seem difficult, if not impossible, to see how AUCC can continue to argue at the Copyright Board for a better deal in a tariff, which will have the force of law. AUCC has just enthusiastically agreed to a “successful outcome” in the form of the “model license” it has negotiated.  As will be seen below, AUCC effectively acknowledges that, at least in its view, opting out will no longer be a realistic alternative once a final tariff is certified.  AUCC lost a preliminary court challenge on the transactional license issue and has shown no indication that it intends to pursue this potentially critical issue any further. 

And it seems clear that AC will press for a final tariff certification from the Board, with any opposition forces effectively defused and decimated by AUCC, UofT and Western. AC now has guaranteed cash flow of an estimated $3 million a year from UofT and Western alone, which is more than sufficient to finance whatever activities it may wish at the Copyright Board and in the Courts regarding its post-secondary campaign.

AC has not agreed to withdraw its tariff application. It is not known whether AUCC even tried to get AC to do so.  AC got pretty much everything it wanted in the model license, except for the full $45 which it conceded it would never get. Absent a change in the direction that this is now headed, it looks AC will also get a mandatory tariff with the force of law that will make the “model license” look good in comparison. In other words, AC seems to be poised to pursue its tariff application for the sole purpose of forcing universities into choosing between a bad deal and an even worse tariff.

AUCC did not fight the Copyright Board’s controversial interim tariff ruling. It did not go about limiting the number of universities required to answer interrogatories (which even the Board itself suggested it could do so). Despite these and other concessions and setbacks, AUCC apparently is agreeing to keep the Board hearing going and to extend the time to “negotiate” the terms of an undoubtedly costly and invasive survey (based upon email sent to the Board on April 16, 2012, the same day the AUCC deal was announced). If, as seems inevitable, AUCC’s continued involvement in AC’s cleverly considered scheme should result in a tariff that is even worse from the  university viewpoint than the model license, this would be even more harmful to Canadian universities than anything we have seen to date. This is because it would force acceptance of the bad model license in preference to the even worse tariff that would eventually be certified. See Ariel Katz’s “game theory” analysis in his blog.

I have been provided with a copy of a very interesting and widely distributed email dated April 16, 2012 (the date the agreement was announced) that was sent to presidents of Canadian universities et al by Paul Davidson, President of AUCC. This email reveals some of the background leading up to this deal.

Among many interesting aspects, this email shows that AUCC decided to try to settle with AC even before the UofT/Western deal was announced on January 30, 2012. Moreover, all but four universities were apparently kept out of the loop by AUCC on negotiations for the model license. The result on April 16, 2012 seems to have come as a shock, even to some very large institutions that were not included in the confidential discussions. This seems very hard to comprehend, given the extraordinary efforts expended in interrogatories and the enormous amount of money for legal costs already contributed by these dozens of other universities and colleges whose input was, nonetheless, apparently not sought by AUCC. The four who were on the negotiating team outside of AUCC (and presumably AUCC counsel) were: David Barnard (University of Manitoba), Elizabeth Cannon (University of Calgary), Patrick Deane (McMaster University), and Tim McTiernan (University of Ontario Institute of Technology).

Mr. Davidson outlines in his email what AUCC regards as the “Benefits/advantages of the model licence”. The following are his “bullets” with my comments interlineated in brackets as [Blue Bold]

·        a five-year term, which is a longer term than that of the Western/U of T agreement, providing greater certainty of price for a longer period; [This is an even longer term to be bound by an agreement that is very unfavourable to universities and that buys AC more time to entrench itself before universities move completely to rely on direct licensing. In other words, AUCC helps AC to further entrench the old school publishers’ obsolete and anticompetitive business models and to delay the transition from a monopolistic photocopying regime to a competitive digital market. It’s hard to see how entrenching a monopolistic supplier benefits universities.  Moreover, greater certainty of price for a longer period always comes at a price. Think about variable vs. fixed rate mortgages.]

·        a term that would take universities beyond both the Copyright Board decision on the current tariff and the potential effective date of the next tariff on January 1, 2014; [The agreement will almost certainly guarantee a very harsh tariff from the Copyright Board, unless the tariff application is withdrawn, which is NOT a term of the deal. Besides, if AUCC continues to represent those institutions that may not like this model license, how can AUCC argue to the Copyright Board that this “successful” model license outcome is so bad and so flawed that the Board should ignore it and impose a much more favourable outcome for the universities?]

·        a better price per FTE student -- $26 -- than had been achieved by the two individual universities, given that AUCC represented a larger group of members; [This is only $1.50 less than the UofT/Western deal. It is about EIGHT TIMES higher than the current minimum of $3.38 per student and 50% higher than the current average per student payment that includes course pack “royalties” of $0.10 per page.... And in any event, given the MFN clauses in the UofT/UOW side letter to the agreements, AC would have to lower the price for them to $26 as well.]

·        enhanced acknowledgement of the purpose of the reporting requirements, including a recognition of the importance of respecting privacy, academic freedom, and university collective agreements; [Shielding professors’ email and the other acknowledgments should not be regarded as an achievement. These basic rights should go without saying. Even the RCMP and CSIS need search warrants to spy on professors’ email. Moreover, the agreement only says that AC won’t get access to such emails, but it doesn’t mean that the Universities won’t be required to audit them and provide the data from them in aggregated form or otherwise. Moreover, the kind of information that the AUCC agreed to provide is highly valuable data that many publishers would be eager to get, but that in a competitive market most users don’t easily divulge. Furthermore, the agreement doesn’t even consider this information as confidential, meaning that AC could conceivably disclose this information to its publisher members that could, hypothetically, be used for anticompetitive purposes.]

·        a mechanism for negotiation of future agreements that would, to the extent possible, avoid another Copyright Board hearing; [A mechanism has always been in place. It is called tough negotiation. The universities could have – but have never really tried – to negotiate on a truly ‘hardball’ basis, as if AC were an adversary – as it clearly should be regarded. The universities have enormous economic, political and bargaining power in this case, should they choose to fully utilize it. However, this would require a much different approach than AUCC has ever taken.]

·        a guarantee that the model licence "trumps" the tariff; [That is an illusion, because those institutions that sign on to the model license will be locked in by the fact that the tariff, as eventually certified, will almost certainly be much worse from a university viewpoint even than the model license.  Therefore, this is not so much a guarantee as a threat and not so much a carrot as a stick. And in any case, there’s no need to provide such guarantee in the agreement, because it’s in the Act. Therefore, this is not an achievement.  The purpose of the provision in the Agreement appears to be a reminder to universities that this is an offer that they can’t refuse – again see Ariel Katz and his Godfather allusion.]   

·        and an enhanced retroactivity agreement with respect to institutions that had opted out and may now choose to sign an agreement, and those who had remained within the tariff. [A little short term gain for severe long term pain. And it’s not really even a short term gain; it’s just a bait to create a prisoners’ dilemma, and an unnecessary concession by the AUCC, (which it already made before) that there’s no effective limit on the Copyright Board’s power to issue tariffs retroactively. Actually, there may well be at some point a successful challenge to the Board’s assumed jurisdiction in this respect; however, such a challenge has not yet been seriously asserted.]

Davidson’s email once again reflects an arguably excessive and even counterproductive concern with risk aversion. AC has no legal basis to sue anyone without first joining the copyright owner(s) and, as far as I know, has never sued any educational institution or employee thereof. It has been unsuccessful in its test case law suits. Suing often unrepresented “Mom and Pop” owners of copy shops for copying entire textbooks is not “test case” litigation. So, it is difficult to understand why AUCC, UofT and Western are apparently willing to be bluffed and bullied so easily, especially when the CCH v. LSUC decision from the Supreme Court of Canada ruling on fair dealing is clearly on the side of “users’ rights” and is there to help them.

Indeed, AUCC does AC’s job very well by “reminding” readers of Davidson’s email that a university can be liable for statutory minimum damages of $500 to $20,000 for each work copied. One can only hope that universities will be provided with a better risk assessment, i.e. one that deals with all relevant and not just selective excerpts of the Copyright Act. Whoever does this assessment (which this post is certainly not purporting to do) might wish to consider, among other things that:

·        a university may not be automatically liable for any infringing acts done by staff, let alone students

·        the current law allows a reduction of statutory minimum damages conceivably to a nominal amount in circumstances that could very well apply in the academic context assuming that there is good faith involved.

However, Davidson doesn’t point this out.

The possibility of operating efficiently and in a competitive environment where everyone who should get paid actually does get paid through direct licensing would be greatly enhanced if AC had not decided to deny transactional licenses. AUCC tried unsuccessfully to get the Board to rule against this decision on an interim basis. However, the Federal Court of Appeal declined to overrule to Board, and never ruled on the merits of this issue because AUCC did not file adequate evidence at the Copyright Board and, predictably, was not allowed to do so belatedly in the appeal court. In fact, at the actual hearing, the Federal Court of Appeal saw no need to even call upon AC to respond.

Prof. Ariel Katz, who is participant in these proceedings in his own capacity, made a valiant effort to bring in the Commissioner of Competition at an early stage on the transactional licensing issue, but the Board stopped this, at least at that stage, and the AUCC did not show any intention of pursuing this issue, which is both a competition law and copyright law issue. This issue may still be winnable – but Davidson’s email shows no indication that it will be pursued.

Davidson states that: 

… once the Access Copyright tariff is certified by the Copyright Board, Access will be entitled to collect the royalties specified in the tariff from each institution, unless the institution secures authorization from copyright owners for all of the copying activities. Copying that falls within fair dealing or another statutory exception will be exempted.

This may not be the case, if certain safeguards are put into the final tariff. However, Davidson seems to accepting it as a fait accompli.

Davidson goes on to say that:

Given that Copyright Board has already ruled against a per-page or transactional licence within the tariff, universities operating without a licence that are found to have made infringing copies would have no alternative but to pay the annual rate per FTE student set by the Copyright Board.  The amount payable to Access Copyright would not be dependent upon either the number of different works copied or the number of copies made. Use of even one work within Access Copyright’s repertoire without permission would be enough to trigger payment of the full tariff fee.

So much for opting out, at least in AUCC’s view.

However, opting out would be possible under a couple of scenarios that come to mind right away:

·        Obtaining a tariff ruling – or if necessary a court ruling – that transactional licenses must be provided by AC’s members on reasonable terms

·        That there be no final tariff, because AC will withdraw its application.

If AC were to withdraw its tariff application, the draconian possibility (apparently conceded at least by AUCC) of being liable for the entire tariff for the inadvertent use of even one published work would vanish. Whether AUCC tried to get AC to withdraw its application is not known. Needless to say, such withdrawal might save a lot of legal costs all the way around.

Even if AC were to continue to refuse transactional licenses in a non-tariff situation, the possibility would be open of forcing it to do so through other channels.

The AUCC has also apparently either not considered or rejected an “all for one and one for all” approach to defend against test case litigation or threats thereof. This might have been and might still be worthy of consideration as an effective an efficient strategy.

Risk assessment and risk aversion are necessary in any organization. But universities exist to, inter alia, provide education, conduct research and promote innovation. While universities should respect copyright law and try in good faith to comply with it, it is not their role to be copyright cops for AC. Indeed, universities have the right and, indeed, the obligation on behalf of their educational community  to pursue their “users’ rights”, as the Chief Justice of Canada, speaking for the entire Supreme Court of Canada, calls them.

Risk analysis in the context might well take into account that no Canadian university or employee thereof has ever (to the best of my knowledge) even been sued by Access Copyright. In the unlikely event that AC should attempt a test case (in which it would have to bring in one or more actual copyright owners), and provided that the alleged infringement was undertaken in good faith, there might well be a very good chance of a successful outcome and a favourable costs award.

There are some significant questions that Mr. Davidson’s email does NOT address. These involve, inter alia,

1.   Did AUCC try to get AC to withdraw its tariff application?

2.   How will the Copyright Board case now unfold?

3.   Will the AUCC continue at the Copyright Board to defend “opt-out” institutions who may consider this model license to be a bad outcome?

4.   How can the AUCC credibly do so, having just concluded a “successful” negotiation for this “model license” that it considers to be such a good deal?

5.   Will those who wish to continue the fight at the Copyright Board and who wish to be represented by AUCCC be required to come up with a further special contribution for legal costs?

6.   What about ACCC (the Association of Community Colleges) – which has so far played second fiddle on this file and now appears to have been left out of the loop on the latest developments?

7.   Where does this leave faculty and students? At the end of the day, students will be paying most if not all of the tariff costs to AC and both faculty and students will have to live with a copyright regime that leaves Canada at an enormous disadvantage in terms of access to knowledge and costs compared to the USA, and other important countries. American observers who I have talked to are astonished at this regime, especially since we have the CCH v. LSUC fair “Magna Carta” from the Supreme Court that potentially allows for more users’ rights, at least with respect to “research”, than the Americans enjoy.

8.   How can a 50%  INCREASE over  an overall cost that should have gone DOWN after the CCH v. LSUC  in 2004 be called  a “successful” outcome, especially when paper course packs are rapidly disappearing and expensive licenses are already in place for much of whatever copying is done that is not fair dealing?

9.   How can AUCC justify an agreement to pay for rights that do not even exist under the Copyright Act, such as “projecting an image using a computer or other device; displaying a Digital Copy on a computer or other device; and posting a link or hyperlink to a Digital Copy?”

So, it seems that AC can apparently have its way with the educational system in Canada. For whatever the reason, AC has thus far overwhelmingly prevailed at the Copyright Board and in the Federal Court of Appeal. One would have hoped that the universities and colleges could have stood up more successfully to what many would regard as copyright bullying

AC’s successful strategy seems to have been to propose outrageously  high tariffs, apparently pulled from thin air, with the result that   objectors – after having incurred huge legal costs - –can  proclaim victory because of the apparent saving from the face amount demanded, even when the amount is a significant increase over the previously “negotiated” and arguably far too high rate. The costs then get passed along to taxpayers and/or students.  This is presumably not how Parliament meant taxpayers’ and students’ money to be spent or how to enable access to knowledge and more competitiveness and innovation in Canada. A better way to deal with educational copying that is more than substantial but not permitted by users’ rights involving fair dealing or other exceptions needs to be found.

The ultimate long range solution here may be for the universities to start their own collective, an idea that I wrote about at length 13 years ago here, the time for which may have finally come.  More about this in due course. 

In the meantime, there are many questions to be asked.  For example:

·        How should universities and colleges determine  their own best interests  with respect to copyright issues, taking into account their various stakeholders, i.e. professors, teachers, researchers,  librarians, and last, but far from least, the students?

·        How then to best pursue and advocate for these interests and these interests alone in the future?

There are also many shorter terms issues to be addressed, but it would not be appropriate to comment on them in this forum.

A lot of discussion is already urgently taking place in a lot of Canadian universities and colleges. Hopefully, answers will be forthcoming as to how the Canadian educational establishment with all of its resources and its long and distinguished history has allowed itself to be out-manoeuvered and, frankly, bullied by a small, self-proclaimed recently established collective with limited repertoire but unlimited ambition and nerve.

HPK