Thursday, December 11, 2014

Teksavvy is asking for $346,480.68 for its “reasonable costs” from Voltage Pictures

I attended on Monday December 8, 2014 as a spectator at the hearing at the Federal Court in the Voltage Pictures v. John Doe and Jane Doe matter presided over by Mme Prothonotary Aronovitch concerning Teksavvy’s motion to be reimbursed by Voltage for its “reasonable costs in the event it had to release information” arising from Prothonotary Aalto’s order of February 20, 2014 which ordered that that:

3. All reasonable legal costs, administrative costs and disbursements incurred by TekSavvy in abiding by this Order shall be paid by the Plaintiff to TekSavvy.   
4. The reasonable legal costs and disbursements of TekSavvy referred to in paragraph 3 herein shall be paid prior to the release to the Plaintiff of the information referred to in paragraph 2 herein.

Teksavvy is asking for the sum of $346,480.68 for its “reasonable costs”, which includes almost $180,000 in legal fees.  Here’s Teksavvy’s own summary of the costs it seeks to recover:
Category Costs
A. Legal costs:
A.1 Stikeman Elliott LLP $ 123,580.98
A.2 Christian Tacit $ 54,240.00
B. Administrative Costs:
B.1 Information Technology $ 27,092.50
B.2 Operations $ 81,524.18
C. Disbursements:
C.1 TekSavvy Inc. $ 55,457.60
C.2 Stikeman Elliott LLP $ 4,585.42
Total: $ 346,480.68

For its part, Voltage suggests that the maximum it should pay for Teksavvy’s “reasonable costs”, including legal fees, for compliance with Prothonotary Aalto’s order should be no more than $884.00.

That is quite some discrepancy.  Full details are available in the hundreds of pages of documents, including time dockets, affidavits and transcripts of cross-examination that are available here, courtesy of CIPPIC. 

I could say a great deal about this matter, but I won’t say any more at this time.  I’ve already said a lot in past blog posts.  In fact, all I will say now is that I find it interesting that my past blog posts about this matter were referred to in the time dockets of Teksavvy’s lead outside counsel viewable via CIPPC’s website.


Sunday, November 30, 2014

Peter S. Grant’s Resource for Copyright Board Practitioners and Watchers

I occasionally do book reviews when I come across or am given a review copy of something that is useful, interesting and makes a positive contribution to the IP literature – either in an academic or practical way, or preferably both. I avoid commenting on books that are disappointing, although that may become appropriate at some point.
Peter S. Grant has been a pioneer and a leader in Canadian communications law in the broadest sense of the term for many decades. Indeed, I took a course from him as an undergraduate in law (this was well after the invention of talking pictures but a long time before Netscape and Pandora) that introduced me in many ways to the wonderful but often bewildering world of copyright and communications law. One of his many enduring and endearing contributions was to show me and countless others how there are complex interconnection between various disciplines such as broadcasting, telecommunications, tax, competition, advertising, copyright and other areas of the law – not to mention the technology and business developments that keep courts and lawyers busy. These are not separate silos. For a long time, he and Bob Buchan organized the biennial Law Society of Upper Canada conferences that explored these connections, and I was among those who have been honoured to be a speaker in this series.

He has recently published the second edition (the first was in 2010) of his work entitled Communications Law and the Courts in Canada 2014.

The book focusses on judicial decisions related to the CRTC and the Copyright Board, as well as many relevant decisions involving constitutional, criminal law, freedom of expression, election law, etc. My comments are solely on coverage of copyright law and the Copyright Board.

His parameters of inclusion for copyright judicial decisions are:
  • All judicial decision re copyright liability of radio and TV stations, cable and satellite distribution undertakings, telecommunications carriers, wireless companies and ISPS
  • All judicial decisions regarding judicial review of Copyright Board
  • “all copyright cases dealing with communications companies”
  • Coverage from long, long ago to the beginning of 2014
Given these parameters, I was somewhat surprised not to find certain notable copyright judicial decisions, for example:

·         Leuthold v. Canadian Broadcasting Corporation, 2012 FC 748 (CanLII), Plaintiff sought $22 million from CBC for inadvertent six time re-use  of some of her still photos from 9/11 in a segment of 18 seconds out of a 90 minute documentary for which she had originally been paid $2,500. The appeal was dealt with earlier this year.
·         Warman v. Fournier, 2012 FC 803 (CanLII), This was an action against a website owner and the National Post – involving fair dealing, copyright in titles, etc. The Defendants/appellants withdrew their appeals on the eve of the hearing. This case could just as easily have involved broadcasters as a newspaper and, in any event, there was definitely an “online” aspect to it.
·         Cinar Corporation v. Robinson, [2013] 3 SCR 1168, 2013 SCC 73  was a landmark decision from 2013 in the Supreme Court of Canada concerning the meaning of “substantial part” in the context of a television program
·         National Gallery of Canada v. Canadian Artists’ Representation, 2013 FCA 64 (CanLII) This concerned whether was as formerly the Canadian Artists and Producers Professional Relations Tribunal had jurisdiction over what appeared to be a very obvious case for the Copyright Board, but which did not go that route. This decision was subsequently reversed in 2014 by the SCC.
·         Robertson v. Thomson Corp., [2006] 2 SCR 363, 2006 SCC 43 (CanLII), Landmark copyright class action case in SCC involving reproduction in databases, involving compilations, collective works, etc. 
·         Compo Co. Ltd. v. Blue Crest Music et al., [1980] 1 SCR 357, 1979 CanLII 6 (SCC). This concerned the meaning of “make” in the context of a sound recording. Of interest to all intermediaries in the chain of broadcasting, distribution, publishing etc. 
·         CCH Canadian Ltd. v. Law Society of Upper Canada [2004] 1 S.C.R. 339, 2004 SCC 13, which dealt with fair dealing by the library of the Law Society for its patrons in the context of faxes and photocopies, but which is a the “magna carta” in many respects of “users’ rights” generally and fair dealing in particular – and which could be cited in many situations involving “communications” companies. 

Perhaps these examples don’t fall literally within the parameter of “dealing with communications companies” which the book indicates includes “radio and television stations,, cable and satellite distribution undertakings, telecommunications carriers, wireless companies and internet providers, as well as the postal services”. But it is increasingly difficult to tell the difference anymore between broadcasters, newspapers, print publishers, and producers of films, sound recordings, etc.  Indeed, all of these types of activates are becoming increasingly converged and some companies seem to do most or all of them. So, as useful as this book may be, it should not be considered totally exhaustive with respect to every potentially relevant judicial decision involving Canadian copyright law and communications – considered in the widest sense. Moreover, given the paucity of Canadian copyright jurisprudence, every notable decision tends to get cited wherever possible. 

There is a brief discussion in §10-8 entitled “How Have the Agencies Faired in the Courts?” Mr. Grant states at the outset this brief discussion that the Board was “overruled” in its decisions concerning the definition of “audio recording medium” on two occasions. This is true as far as it goes, but it actually should go further because the FCA also  all but overruled itself regarding an earlier decision in which it did uphold the Board on the meaning of “audio recording medium”.  Mr. Grant then adds an editorial comment that these Federal Court of Appeal decisions “have created a significant and regrettable loophole in Part VIII of the Copyright Act”. Naturally, having made winning arguments in these two cases in the Federal Court of Appeal (See here and here) and notwithstanding the unusually outspoken views of the former Chair of the Copyright Board, Justice William Vancise, I would characterize the result rather differently.  But I would be the first to defend Mr. Grant’s right to make such editorial comments, having made the occasional editorial comment myself. That said, such comments do require some elaboration and he is perhaps a bit too circumspect and perhaps sympathetic overall to the Board in terms of some of its other reversals and corrections in the Federal Court of Appeal and the Supreme Court of Canada. With respect to “fair dealing”, while the Board’s decision in the Alberta case was indeed sent back for reconsideration, given the narrow way the appeal was framed and the way relief was sought,  it was also effectively and fundamentally overruled in its approach and even its fact finding regarding fair dealing in the educational context. 

Perhaps, in a future edition, Mr. Grant will include an explicit and reasonably detailed discussion of “standard of review’, although this is admittedly an elusive and even ineluctable “sempiternal” issue that could consume a whole volume in itself. Nonetheless, it is the inevitable starting point of any judicial review exercise.

The bulk of the book consists of concise but still useful and sometimes even rather detailed summaries of 569 cases that fit the stated parameters of the book. These are far better than most headnotes and quite useful in some cases as a departure point for further research on related cases or issues, for example the one dealing with the Supreme Court of Canada decision in in the Province of Alberta case. (§55-556).

There is, of course, an alphabetical index  of decisions for those who already know what they are looking for.

Mr. Grant provides a useful topical index in §§70-2 to 70-4 of the various copyright decisions that he has catalogued and summarized. However, the index could use more detailed and comprehensive. For example, some important and even hot-button issues as “evidence” and “jurisdiction” or “retroactive” are not to be found.

This book, which is privately published by Mr. Grant’s firm, McCarthy T├ętrault and available here, is going to be very useful and a potential time saver to anyone concerned with the work of the Copyright Board and the CRTC. As noted above, I’m not sure that it’s 100% comprehensive and exhaustive in what it purports to cover – but, with that caveat, its close enough to be a very good starting point for research that needs to be done by practitioners who work before the Copyright Board. Doubtless, the same would hold for the CRTC. About 30% of the book consists of statutory material, which is easily and freely available online – but it’s going to be handy at times to have this material in one place. There is a lot of “value added” and convenience that comes with this book. At $90, the book should pay for itself quickly for many practitioners.

The use of this book, in conjunction with the Board’s website and the “free” databases of the Federal Court of  Appeal, the Supreme Court of Canada and could  save interested scholars and practitioners quite a lot of time and their clients a lot of money. Policy makers in the government and some assiduous academics will also find it to be a very useful and productive investment. Bedtime reading, however, it is not.  Still, I will look forward to the next update in a few years.

A very simple further step that the Copyright Board could easily provide in the meantime, which would be even easier now with use of this useful book and which is long overdue, would be the provision of links on its website to the judicial review decisions by the Federal Court of Appeal of the Board’s own decisions and any resulting decisions of the Supreme Court of Canada, when the case gets that far. The Board already has a useful database of all its own decisions from 1990 onwards. With the help of Mr. Grant’s book and the “free” databases mentioned above, this very easy exercise should not require more than a few person days at most of time on the Board’s part and could be readily integrated into the Board’s existing website template and design. There are not that many of these decisions, but they are extremely important to copyright practitioners and scholars. This would save researchers considerable time and effort in the result. This would accomplish much to make the rather opaque state of jurisprudence on the Board’s corpus of decisions much more accessible. With the Board’s four full time lawyers and dozen or so other full time employees (not counting its GIC appointed members), hopefully this is something that we can expect sooner rather than later.


Friday, November 28, 2014

More on Recent and Current Developments at and Concerning the Copyright Board of Canada

I recently wrote about the reversal by the Federal Court of Appeal (“FCA”) of the CAFDE decision by the Copyright Board in which the Board was held to have erroneously reversed its own originally erroneous decision. I indicated that that this ruling was notable not only for its nature but that it comes at an interesting time in the Board’s history. To wit, the CAFDE decision:
All of this happening while the Board also has on its table a complex and expensive process that has grown to involve foreign expert opinions in order to determine whether or not the 2012 Canadian domestic copyright modernization legislation created a new “making available” right that could result in an additional tariff layer. This is being done in the context of the following matter: CSI - Online Music Services (2011-2013); SOCAN Tariff 22.A - Online Music Services (2011-2013); SODRAC Tariff 6 - Online Music Services, Music Videos (2010-2013). This is taking place as the result of an apparent lack of agreement on the implications of the 2012 Supreme Court of Canada decision in 2012 in the ESA case which dealt, inter alia, with how s. 3 of the Copyright Act is to be construed.

Interestingly, this also comes at a time when the Board has - by its own admission – committed yet another “error”, concerning the issue to which I had alluded in my September 24, 2014  posting about the July 18, 2014 Netflix decision, in which judicial review is already underway as noted above. I indicated on September 24, 2014 that:
Also unresolved and up in the air are issues around “downloads” and “making available right” – on the one hand, the Board says that SOCAN not entitled  but then the tariff refers to liability for downloads.

Shortly after my September 24, 2014 posting, the Board on October 8, 2014 published this notice which discloses the error and which coincidentally came just a few days before the CAFDE decision of the FCA. It is interesting now to see how the Board apparently is going about the process to “proceed with the correction” of its erroneous decision by the simple “issuance of an erratum by which any reference to downloads would be deleted.”
October 8, 2014
On July 18, 2014, the Board issued its decision (the “Decision”) for the Statement of Royalties to Be Collected by SOCAN for the Communication to the Public by Telecommunication, in Canada, of Musical or Dramatico-Musical Works [SOCAN Tariffs 22.D.1 (Internet – Online Audiovisual Services) and 22.D.2 (Internet – User-Generated Content), 2007-2013] (the “Tariffs”). The Tariffs were published in the Supplement of the Canada Gazette, Part I, Vol. 148, No. 29, on Saturday, July 19, 2014.
The Decision was clear with respect to the Board’s intention related to the fact that SOCAN did not have the right to collect royalties for permanent and limited downloads. In fact, paragraph 14 of the Decision reads as follows:
The decision of the Supreme Court of Canada in ESA v. SOCAN meant that SOCAN no longer had the right to collect royalties for permanent downloads and limited downloads. This was reflected in the Board’s recent decision on online music services which had been structured the same way. As a result, neither agreement filed by SOCAN makes reference to downloads.
Although the Board’s intention was clear, the Board made an error in assuming that neither agreement made reference to downloads, and in certifying, as requested by the parties, Tariffs that reflected the terms and conditions of the agreements. Thus, the certified Tariffs do not express the intention of the Board and contain provisions related to downloads. In particular, the definitions and reporting requirements refer to downloads of audiovisual works, limited downloads and permanent downloads.
The Board’s preliminary view is that the Tariffs can be corrected in order to reflect the conclusions of the Board clearly conveyed in its Decision, for the following reasons:
·         First, the Board committed an error when it certified the Tariffs;
·         Second, the error committed by the Board is in expressing its intention with respect to the rights of SOCAN to collect royalties for downloads;
·         Third, the Board’s intention is manifest in paragraph 14 of its Decision;
·         Fourth, because of this error in expressing its manifest intention, the Board is not functus officio; and,
·         Fifth, the Board has the inherent authority to correct such error.
The Board would like to proceed with the correction of the Tariffs by the issuance of an erratum by which any reference to downloads would be deleted. For convenience, we have attached to this notice a marked version of the proposed, corrected Tariffs.
The Board would like to know whether any party objects to this proposal no later than Friday October 17, 2014. If no objection is received, the Board will proceed accordingly.
(highlight added)
The Board has published a proposed redlined version of the proposed deletions  that would be involved, which are quite extensive. Apparently, no parties objected prior to October 17, 2014 as to the Board’s proposed course of action. This remarkable announcement is in in the current issue of the Canada Gazette. Whether this unusual turn of events and the FCA’s CAFDE decision of October 20, 2014 will find their way into the Netflix judicial review proceedings underway or have any other repercussions remains to be seen. 

All of this is also happening as the Board continues to be caught between a rock and hard place on the Access Copyright Post-Secondary tariff, wherein the objectors have withdrawn from the hearing and Access Copyright is already setting the stage for judicial review and the Board has apparently been unable to decide whether to have an oral hearing or to proceed on paper. In the latter case, Access Copyright may have additional grounds for review, if it doesn’t like the outcome. The K-12 hearing process also seems to remain quite open and active, despite the original hearing having taken place in April and early May of this year. Both of these matters could result in rulings with potentially controversial implications concerning the “mandatory tariff” issue. I will have more to say about these proposed educational tariffs in due course….

And all of this is happening as the Board sits without a Chair. The term of past Chair, retired Judge William Vancise from Saskatchewan, expired on May 13, 2014. He could not have been reappointed beyond that date because that’s the way the statute works. His jurisdiction to remain seized of unfinished matters is spelled out as follows in the Copyright Act:
Concluding matters after membership expires
66.5 (1) A member of the Board whose term expires may conclude the matters that the member has begun to consider.
Marginal note: Decisions
(2) Matters before the Board shall be decided by a majority of the members of the Board and the presiding member shall have a second vote in the case of a tie.
R.S., 1985, c. 10 (4th Supp.), s. 12.

It may not be absolutely clear what is meant by “may conclude matters that the member has begun to consider”.  Whether this could or will become an issue in any of the several outstanding matters now before the Board remains to be seen. Clearly, it would not be appropriate to discuss this question with respect to any particular outstanding matters.

All of this is happening as there is much speculation and suspense about who the Government will appoint as a new Chair and when this will happen. I have taken the liberty months ago of suggesting that the appointment of the next Chair be made from the ranks of sitting or retired judges of the Federal Court or Federal Court of Appeal, many of whom already have considerable expertise not only in copyright law but in administrative law, and in some cases in constitutional, competition, communications and/or other often useful and relevant aspects of the law that can arise before the Board – and the Federal Court of Appeal.  All of the sitting federal courts judges reside in the National Capital region. Some of the retired judges still do. This fact alone would have the additional advantage of saving the government a lot of money.  All of the judicial chairs of the Board since it was established in 1989 have been from the courts of the provinces. Perhaps the time has come for the Government to make an appointment from the ranks of the sitting or retired judges of the Federal Courts.

I have suggested earlier this year that the Board is at a cross-roads. Michael Geist has been far more blunt, saying that “The Board may keep a steady stream of lawyers and economists busy, but it is time to acknowledge that it is broken”. There is increasing concern that that:
  • The Board’s hearing process regularly takes years longer than what we see in the Courts and other comparable tribunals, even in some far more complex cases that may involve patent, competition or communications law. It often takes four years or more for a proposed tariff just to get to the hearing stage at the Board and another two years or more for the Board to render a decision. One of the results of these long time lines can be tariffs with a sometimes very long retroactive reach that can come as a shock to many users who are without effective representation at the Board and may have been unaware of the looming liability. 
  •  While the great cost of Board hearings was once considered a safe investment with a virtually guaranteed lucrative return by most collectives and even by bank lenders, this is probably no longer the case. The very high cost of Board proceedings has always been a problem for users, especially those who cannot pass the costs on to their customers. However, these high costs and delays and the uncertainty of the cost/beneficial outcome are now a problem for collectives too. 
  •  The Board’s decisions are, it seems, increasingly and sometimes dramatically being reversed by the Federal Court of Appeal and the Supreme Court of Canada (“SCC”). The SCC decided five cases from the Board in 2012. While the Board was upheld in three of those cases, it was dramatically reversed in two of them. As noted above, the SCC has just taken on another important case involving technological neutrality and possibly other issues. 
  •  While there are calls for greater resources for the Board, it is not clear that this would solve any problems. As I have earlier written, with about 16 full time equivalent employees (FTEs), plus up to five full or part time Board members themselves, this Board is already by far the largest organization of its kind anywhere in the world. It will have a net cost of operations for 2014 in excess of $3.5 million. It is an interesting fact that the Copyright Board already has almost 10% of the budget of the Supreme Court of Canada. The Copyright Board’s net cost of operations for 2014 will be more than $3.5 million. That of the Supreme Court for 2013 was less than $41 million. The Copyright Board typically renders only about two or three (more or less) substantive decisions a year that typically require several years to reach the hearing stage. The hearings are rarely longer than a week or two. There is typically a 1.5 to 2 year (or even more) delay after the hearing before a decision is rendered, and the decisions are often then reversed after judicial review. By contrast, the Supreme Court of Canada in 2013 received 529 applications for leave to appeal, heard 75 appeals and rendered judgment in 78 cases. The average time between a hearing and the rendering of a judgment was 6.2 months. More statistics on the SCC can be found here.
If the Government is sufficiently concerned about these issues, progress can be made in the short and medium term in two tangible and achievable ways, as I have earlier suggested:
  • By appointment of a Chair who can hit the ground running at least in terms of both copyright and administrative law, and quite possibly some other useful field such as communications or competition law. As I have suggested, such a person might be found from the ranks of the sitting or retired judges of the Federal Court or the Federal Court of Appeal    
  • Through regulations that the Government can implement pursuant to the existing legislation, either at the behest of the Board or the Departments or both, in order to provide more certainty and efficiency. Examples of such clearly articulated and time-tested regimes can be found close at hand, for example with respect to the Competition Tribunal, the Canadian Industrial Relations Board, the Canadian International Trade Tribunal, the CRTC and other comparable federal tribunals.
While there is much to be said for the informality and normally high degree of collegiality among counsel and in the way the Board works with counsel, the fact remains that there is wide-spread concern that, at the end of the day, things take much too long and costs are much too high for all concerned, including the collectives themselves. With respect to certain issues such as:
  •  the order of proceedings (the apparently unique process of interrogatories first and “pleadings” only  at the very end);
  •  departure from the normal rules of evidence, especially regarding expert witnesses; and,
  •  timing benchmarks,
it would seem that the Board has arguably departed from conventional practices and procedures in the federal administrative law context, where cases are often far more complex and financially significant than Copyright Board cases. For example, the Competition Tribunal recently dealt with the massive and complex Visa and MasterCard credit card case in well under three years from beginning to end.

It seems that the Government is indeed aware of the possibility and need of Board reform through regulations, which can originate either from the Departments or the Board itself or both. Hope springs eternal that we might actually see something sooner rather than later. See the Government Response: Fifth Report of the Standing Committee on Canadian Heritage, "Review of the Canadian Music Industry" (Presented to the House on October 10, 2014).  This report from the Minister of Canadian Heritage indicates that:
On the time it takes for the Copyright Board to issue decisions, the Copyright Act provides the Board with authority to set its internal procedures. I understand that the Board is currently reviewing these procedures in an effort to streamline the royalty-setting process. Changes to that end could be considered as early as fall 2014. Beyond this, the next mandated Parliamentary review of the Copyright Act will be an opportune moment to consider important copyright issues, such as the broader framework in which the Copyright Board operates.
(highlight added)

This may refer to the process announced by the Board about two years ago to embark upon an internal review to be led by the Board’s former General Counsel that was to involve a select few invited outside counsel with experience before the Board, The mandate from the Board’s Vice-Chair was:
….. I expect that the committee will wish to focus generally on (a) proposing possible changes to procedures and processes that may lead to Board proceedings being more efficient and, possibly, less costly, (b) considering improvements to other aspects of Board processes and operations that may enhance the quality of the Board’s services to collectives, copyright users and the public in general, and (c) identifying other issues where improvements may be required and which may be addressed as time and resources allow. As part of this exercice [sic], the committee might also wish to identify more specific recommendations, on a small number of issues, and that can be addressed relatively easily, in the hope of delivering significant improvements fairly rapidly.
(highlight added)
There was notably no mention by the Board of potential suggestions for regulations to be proposed either by the Board or the Government or both.  There was clearly a hint about the possible need for more resources. There was clearly a suggestion that that there are only a “small number of issues” that need be addressed in this process. At the present time, the closest thing that the Board has to rules or regulations is its “Model Directive on Procedure”, which provides little or no guidance to solving the problems as currently perceived.

While it is possible that this non-transparent process may soon provide a report to the Board, the process for dealing with that report in turn is unknown, much less its substance. It would appear unlikely that any dramatic results, much less regulations, will come from this process. All of this may be contrasted with the much more open process of implementing regulations that the Government of Canada through the its departments normally employs.

There is no question that, even though things seem to move very slowly at times at the Board, it has over the last 25 years or so produced a huge volume of tariffs, important decisions and countless procedural rulings that have had an enormous impact on the copyright collective management sector that now generates about $500 million in revenues per annum in Canada. The challenge now is to lower the overall transaction costs of the Board process so that the creators actually reap the benefits they deserve from the copyright system through collective management and users are able to enjoy their rights under the legislation without paying for unnecessary tariffs and with a reasonable degree of certainty at a reasonable cost and in a timely and minimally retroactive manner when tariffs are appropriate.