Update re Access Copyright, York University and Copyright Board

Here is an update on the Access Copyright litigation against York University and what's happening or not happening at the Copyright Board.

Here’s a letter dated May 13, 2014 filed by Access Copyright concerning the apparently very slow process to “bifurcate” certain issues.  As earlier predicted, it looks like this could indeed go on for a very long time.  Here’s the “docket”  for this case.

Also, the parties have now requested and been granted a trial date. The trial is set to begin on May 16, 2016 and is scheduled for 15 days, which is a rather long time for a copyright matter.

On a related front, there is no apparent indication of how the Copyright Board intends to proceed on the Post-Secondary tariff hearing, which is proceeding effectively by default.

Thus, it looks like there will be a long wait to an answer about whether there can be a “mandatory tariff”, whether “interim” or final, that could render a university liable for the entire cost of a tariff if the university is found to be responsible for a single infringing copy of a single work in Access Copyright’s repertoire. That cost could clearly be millions of dollars, in addition to whatever the university has already paid for various transactional and other licenses.

From what we have seen of the pleadings in the York University case, it is not even clear that this case will resolve the issue, except perhaps in respect of the “interim” tariff under which it is being sued. That could still leave the larger and long term issue of whether a “final” tariff can be mandatory up in the air. There will presumably eventually be a final tariff resulting from the default proceeding underway at the Copyright Board, unless the Board concludes that Access Copyright is not entitled to any tariff as sought.

There may be other ways of getting an earlier answer to questions about a “mandatory” tariff.  However, there is nothing on the record indicating that this is about to happen.

Finally, here’s a link to the recent debate between Roanie Levy, CEO of Access Copyright, and myself that took place at Brock University on May 29, 2014.

HPK

Chief Justice McLachlin on Administrative Tribunals and the Courts: An Evolutionary Relationship

I should have noted this earlier, but here's an important speech by the Right Honourable Beverley McLachlin, P.C., Chief Justice of Canada, dated May 27, 2013 concerning Administrative Tribunals and the Courts: An Evolutionary Relationship.

This is a "must read" in terms of the role of administrative tribunals generally, the role of the courts in reviewing their decisions, and the evolving issue of standard of review.

There's a useful quote by her of a statement by Justice Abella when she was sitting on the Ontario Court of Appeal:

Designed to be less cumbersome, less expensive, less formal and less delayed, these impartial decision-making bodies were to resolve disputes in their area of specialization more expeditiously and more accessibly, but no less effectively or credibly.

HPK

 

 

Pandora’s Box or Panacea and/or Re:Sound’s Resounding Defeat? Canadians Still Can’t Get There from Here.

(F.S. Church - Wikimedia)

Just over a month ago, the Copyright Board issued a complex, lengthy, important but perfectly readable decision regarding a tariff with the daunting  title of “STATEMENT OF ROYALTIES TO BE COLLECTED FOR THE PERFORMANCE IN PUBLIC OR THE COMMUNICATION TO THE PUBLIC BY TELECOMMUNICATION, IN CANADA, OF PUBLISHED SOUND RECORDINGS EMBODYING MUSICAL WORKS AND PERFORMERS’ PERFORMANCES OF SUCH WORKS [Re:Sound No. Tariff 8 – Non-interactive and semi-interactive webcasts, 2009-2012]”.

Let’s keep it simple and call it the “Pandora” tariff, because Pandora is the high profile absentee music streaming service that does NOT offer service in Canada – presumably due to the confusing and expensive and hitherto (and perhaps still) apparently effectively dysfunctional copyright landscape, at least from its point of view. Pandora is really what this tariff is all about for the purposes of the Canadian public – and the Board makes it quite clear that this is the case. Michael Geist has also quite rightly focussed on the Pandora aspect in his prompt report on this decision.

If you try to log onto www.pandora.com as of now and for a long time up till now, this is the message you will get:

We are deeply, deeply sorry to say that due to licensing constraints, we can no longer allow access to Pandora for listeners located outside of the U.S., Australia and New Zealand. We will continue to work diligently to realize the vision of a truly global Pandora, but for the time being we are required to restrict its use. We are very sad to have to do this, but there is no other alternative.

Here’s the Board’s Fact Sheet about its decision, which singles out Pandora by name. Apparently, the final result is “close” to what Pandora asked for. And apparently it’s a small fraction – about 10% or less – of what Re:Sound sought. I’ve repeatedly in various fora including Fordham mentioned Pandora as a prominent “no show” in Canada – apparently due to copyright issues. In the USA, Pandora has about 150 million users – almost half the US population. In Canada, it has none. Unless, perhaps, Canadians can circumvent Pandora’s geoblocking by using VPN, but I wouldn’t know about such things.

According to the Board’s New Release:

The tariff rate for commercial webcasters is set at 10.2 cents per 1,000 plays. While Re:Sound was asking for a rate of between $1 and $2.30 per 1,000 plays, the rate set by the Board is close to what the users participating in the hearing (including Pandora)were suggesting.

          (highlight added)

The Copyright Board has put out a Fact Sheet with some numbers that seem to look quite good, from Pandora’s viewpoint – but which appear to be largely speculative on the part of the Board.  Based upon the Board’s own apparently speculative numbers, at least in terms of Pandora’s potential revenues, the certified tariff will result in a $306,000 liability divided by $5,800,0000 in revenues, or about a 5.3% cost, which still appears to be more than twice the rate that Pandora proposed to pay, namely 2.1% with no minimum fee for the non-interactive service and a rate between 1.5% and 2.65 % for the semi-interactive service with a minimum fee of $100 per year per “channel”.  Eventually, the Board decided to drop the concept of “channel” from the tariff. Nobody seemed to understand what it meant in this context. Whatever it meant, it certainly was not the same as a TV, radio or even satellite or cable “channel”.

But it’s even murkier than that. Pandora fought hard for a rate based upon percentage of revenues, as has been the case for radio and TV in Canada for decades. Instead, the Tariff is based a rate based upon “plays”. Under such a regime, which Pandora resisted, a service can end up paying more in tariff fees than it earns in revenues, which has reportedly happened in the USA. That’s a prescription for insolvency and not for innovation.

The acid test will be if Pandora now starts to operate in Canada. If so, the Copyright Board may have struck an “equilibrium price ratio” that is not simply splitting the difference in the form of “(A+B)/2 = ~Tariff as Certified” result – which has sometimes seemed to have been the result and which has contributed to much criticism of the Board over the years, since such outcomes are too often so expensive, so slow and so frequently unsatisfactory. Even the possibility of “splitting the difference” becomes impossible, if a collective overreaches by a quantum amount.

As for the CBC, according to the Board “CBC will pay annual royalties of about $36,000 for all of its webcasting operations, English and French.”

As for the overall impact, the Board states: 

[208] Our estimate of the total quantum of the Re:Sound 8 tariff is about $500,000, taking into account other semi-interactive webcasters that have launched or may launch in Canada, as well as non-interactive webcasters. This estimate is arrived at knowing that the music streaming market share of Pandora in the U.S is about 70 per cent, and that its Canadian market share could be lower, given that some other firms have already been operating in Canada.

If that is right, it may take Re:Sound some time to recoup its legal costs from this proceeding – something which it and certain other major collectives may not be too happy about, to put it mildly. Indeed, this could then prove to be something of a tipping point for collectives. Certain collectives have relied upon a business model that involves spending millions on an inaugural tariff using a large law firm and expensive experts based upon the nearly certain and even bankable prediction that the costs will be quickly repaid by the users once the tariff is in effect. Usually, that has worked out predictably and on cue. The one notable exception has been the ERCC.

However, if the Board’s figures are right here, that may be far from the case in this instance. It could take Re:Sound a long time (several years) to recoup its legal costs and disbursements in this instance. And if Pandora or a similarly successful player doesn’t decide to do business in Canada, even the $500,000 per annum figure may prove to be unobtainable.

If the decision proves to be “user friendly”, which is not yet clear, could it be that the Board itself is finally responding to “market forces”, namely the prospect of Government imposed regulations on how it conducts its hearing (which I have suggested)  and even legislative reform to deal with a process that all too often has been extremely slow, extremely expensive, extremely retroactive and often prone to significant judicial reversal? And which Michael Geist refers to as “broken”?

Just for the record, the timeline here was as follows:

-      Tariff filed March 28, 2008

-      Oral hearing held over the course of ten days in September and October of 2012

-      The decision was rendered on May 16, 2014 – approximately 19 months after the hearing was over.

-      That’s more than six years to get to a decision that will face judicial review (see below), which will add at least another year or more to the timeline.

While this was a very complex matter with many parties and copious evidence, it is still difficult to understand such a delay and such a long timeline. To make matters worse, the tariff is only valid until the end of 2012.  It is now 2014.

Moreover, before anyone uncorks the champagne, the Board itself notes in para. 186 that the provision of Canada’s new 2012 legislation, when they come into effect, will affect the “eligible repertoire” issues. The new  legislation, when it is fully in force, will means that Canada has to give "national treatment" to other WIPO Performance and Phonograms Treaty (“WPPT”) members – unless those countries don’t provide similar rights to those provided by Canada and the Minister so declares. Under the previous legislation, users did not have to pay for performances of "non-eligible" (e.g. non-Canadian, i.e. American and European, to oversimplify) sound recordings or performers. That cut the rates that would have otherwise been imposed effectively by more than 60% in this case.

So, the Board is saying that the tariff only goes as far as the end of 2012 and the effect of the new “national treatment” provisions is not something that it needs to rule on at this time. But generally, as the Board says at para. 186, the entry into force of these provisions“will vastly expand the repertoire of sound recordings that is eligible to receive equitable remuneration”. (emphasis added).

We now know the date that the new regime will take effect – which will be August 13, 2014.

As for the Statement Limiting the Right to Equitable Remuneration of Certain Rome Convention or WPPT Countries, see here.

Since the tariff only goes to the end of 2012 and we are now into 2014, it’s not clear what this will mean to Pandora, which is still not operating. It may be that the current tariff will continue on as an expired “previous tariff”, as contemplated by the Act and that Pandora will operate, if it wishes, under these tariff provisions – for a while, anyway.

This kind of retroactive certification of tariffs and uncertainty as to the present and future has always been problematic at the Copyright Board – but is especially so given in the current rapid cycles of evolution of technology and business models. The irony in this instance is that, at the end of a very long process, the Board chose to reject a lot of the very elaborate and expensive evidence that was filed – especially by Re:Sound itself, along with some odd arguments, such as that of Re:Sound to the apparent effect that online streaming services “cannibalize” CD and online sales and that Re:Sound should therefore be compensated for this loss. As if the music industry is entitled to a guaranteed annual income? That sounds almost like car and gasoline companies asking for compensation when cities put bike lanes in place. Or horse and buggy makers asking for an earmarked tax on the automobiles that put many of them out of business. 

Such a long period of time – more than six years to date and now still counting with judicial review is an eternity in the world of the internet and innovation. In 2008, when this tariff was filed, the first generation of iPhone smartphones was barely on the market and the first iPad tablets were still two years down the line. So, maybe by 2016 or so we will have a final certified tariff to the end of 2012 that was already obsolete when it was filed in 2008.

Meanwhile, the world moves on with Google’s music service, VPN, and in other ways in which Canadian internet users can adapt. Unfortunately, some may even turn to illegal means, which become more appealing when legal means are too expensive or too difficult to find in Canada.

Not surprisingly, Re:Sound has filed a sweeping notice of application for judicial review. It is very sparse but very sweeping. The Board has been very careful, as it usually does, to try to “bullet proof” its decision as one mainly of fact finding – which could make such review rather difficult. But perhaps Re:Sound may do better here than it has done of its last couple of judicial review efforts. In one of these, it argued that the word “excludes” means “includes” when it comes to the definition of “sound recording”. To the surprise of many, the Supreme Court of Canada actually heard this case as part of the “pentalogy”. Spoiler alert – just like the Board and the Federal Court of Appeal below, the Supreme Court did not agree with Re:Sound.

For better or worse, we do live in interesting times. Will Pandora now enter the Canadian market? There are other competitors and substitutes now in place and high Canadian internet costs and bandwidth caps and other deterrents. Will we eventually find out if the Copyright Board opened Pandora’s Box or provided Pandora’s panacea? Has Canada’s music industry once again proven itself to be remarkably out of tune with new technology and new business models? Will Canada’s music industry price itself out of the market and ignore the technological tide? Will Re:Sound succeed in reversing an apparently resounding defeat at the Board with a victory  in the Federal Court of Appeal, and possibly the Supreme Court of Canada – if the case gets that far, which is not very likely? The one thing that we can be quite certain about is that the interested parties and the Canadian taxpayers have spent millions of dollars to date to get to this monumental moment of indecision and uncertainty. And we  still cannot get there from here when in it comes to Pandora in Canada.

HPK

Copyright Trolling in a Perfect Storm of Connected Canadian Legal Dots? From Teksavvy to Bill S-4

(Wikimedia)

Today’s announcement that the ‘Notice and Notice” provisions of the Copyright Modernization Act (“Bill C-11) will come into effect on January 1, 2015 without accompanying regulations is the latest in a series of dots that, even if not meant to be connected, are very likely to be connected by those who stand to benefit from such connection. This could all lead to a perfect storm of mass threats of copyright litigation and actual copyright trolling activity – with lots of Canadian dolphins (e.g. ordinary people doing ordinary things) getting caught in the “net”, so to speak. So – let’s look at these dots and how they may be or get to be connected:

•  The Voltage Pictures disclosure order from Federal Court dated February 20, 2014 opened the door for Voltage to get subscriber details from 2,000 or so Teksavvy customers. Teksavvy was criticized only by a few, including me, for apparently doing little other than buying time for a law school clinic to stand in for the public interest and looking out to cover its supposedly significant costs related to the eventual disclosure.
• In the result, the door was opened and conditions were imposed and everyone declared victory. However, the fact is that, unlike in 2004, the disclosure order was granted and the issue of inadequate, hearsay evidence was not even mentioned by the Court. That could be because the motion was not argued mainly on the basis of lack of sufficient, reliable non-hearsay evidence. Indeed, in the result there was no mention of hearsay in the ruling, perhaps because it had barely been mentioned in the oral argument, according to the unofficial transcript, and then only by Voltage. I should disclose my involvement in the 2004 litigation, which achieved a very different result in the form a victory for the public interest mainly because the record companies were unable or unwilling to come to Court with adequate, reliable and non-hearsay evidence as required by the Court at the time. This time, it appears that all concerned focussed, for whatever reasons, on issues other than the rules of evidence. Monday morning quarter backing several months after the fact is admittedly easy to do. But I was onto this issue at the time and, arguably, one should take victories where they come and a victory in this case based on the quality and hearsay nature of the evidence arguably seemed quite achievable.
•  Even though there were potential difficulties for all concerned arising out of the Court’s Voltage & Teksavvy order, everyone proclaimed victory.
•  Bill S-4 – which would apparently allow copyright claimants and others to seek “voluntary” disclosure of private info from ISPs was introduced in the Senate on March 8, 2014, just a couple of weeks after the Teksavvy ruling. The lack of general concern with the retreat from the strict requirement for adequate non-hearsay evidence and the lack of apparent concern with Voltage’s success in the Voltage/Teksavvy ruling - indeed the proclamation of victory by some who arguably could and should have been upset by the result - may have encouraged and empowered the Government to proceed with this voluntary disclosure legislation.
• Almost immediately, a few days later, on March 11, 2014 Rightscorp – which pursues mass enforcement via ISPs – announced it is moving into Canada and had retained a major Canadian law firm and prominent lawyer to engage in pursuing illegal downloaders. The press release indeed trumpeted the recent Teksavvy decision: “"Recently in a Canadian Federal Court decision, an Internet service provider (ISP) was ordered to hand over 2,000 names of customers that allegedly violated copyrighted works by illegally downloading movies." 
•  Meanwhile, Voltage is pursuing it disclosure efforts and Teksavvy’s its costs recovery for legal and admin costs in Federal Court – with a very busy docket in T-2058-12 . There’s clearly a lot of money potentially on the table in this case alone, not to mention what may follow as suggested below. 
•  On Friday, June 13, 2014 SCC delivered the   R. v. Spencer decision, which clearly raises serious questions about the constitutional viability of the voluntary disclosure provisions of Bill S-4. 
•  Notwithstanding the Spencer decision, Bill S-4 was passed by the Senate without amendments on Monday, June 16, 2014. It will now be considered by the House of Commons ("the other place").
• The Government announced today June 17, 2014 that the “Notice and Notice” provisions of C-11 will take effect January 1, 2015 – without regulations – which means that ISPs cannot charge for sending out the Notices that they will be obliged to send, since there are no regulations in place. See s. 41.26(2) of the Copyright Act. Without regulations, and an oversight mechanism, what would prevent the insertion of “settlement demands” in these Notices? But even such insertion of “settlement demands” may not be necessary. 
•  If Bill S-4 becomes law as is, it will allow for the voluntary disclosure of subscriber information, with no court order or scrutiny and with impunity for an ISP, where an alleged rights holder seeks such information because it alleges that a contravention of the Copyright Act “has been, is being or is about to be committed”. This would take any remaining pressure from privacy advocates, however minimal it may be, off the Teksavvys’ of Canada to resist disclosure – or even to go through the motions. As disappointed as some may be with Teksavvy in the circumstances, it must be said that Bell and Rogers have never resisted any disclosure motion as far as I know and Videotron has actively cooperated in the past. 
•  Indeed, if this law is passed and not successfully challenged (and who would mount the challenge?), will potential trolling entities be able to cut deals with ISPs for “voluntary disclosure” of the names and address of alleged illegal downloaders based upon IP addresses? For example, could a copyright owner or its representative simply ask for “voluntary disclosure” of the names, addresses, phone numbers and activity relating to a certain film by any customers of that ISP? 
•  If this turns out to be the case, the rights holders could then “monetize” their copyright rights and the ISPs could “monetize” their subscribers’ privacy. All of this would be with legislative sanction, approval and immunity from class actions and PIPEDA remedies. This could potentially be lucrative for all concerned – even with a potential $5,000 cap on damages for non-commercial activity. A few thousand bucks here and few thousand bucks there from thousands of Canadians pretty soon would add up to some real money. 
•  So – will various rights holders – or those acting for them – try to take advantage of what is shaping up to be a potentially perfect climate for the perfect storm to chase “illegal” downloaders and get a quite a lot of money by automated processes? Could Canada turn into a troll or mass litigation haven? It should always be recalled that “troll” and even sometimes even apparently legitimate mass litigation or monetization activity invariably catches many innocent victims and can impose disproportionate penalties on virtually all targets because it is simply more economical to pay than to fight. We have seen this turn truly ugly in other jurisdictions when unscrupulous lawyers chase after alleged downloaders of pornography and the stakes go way beyond the merely economic and the exercise begins to resemble mass extortion. 
•  With the notorious lack of competition in the ISP business, and with a possible scenario in which ISPs could “voluntarily” provide subscribers’’ private information to trolls, bleak scenarios can be imagined. The Courts can only intervene if asked and if the litigation is vigorously and competently pursued by one or more parties determined to win. 
•  This bleak future may not be what is intended by the Government – but perfect storms, tsunamis, and other such unfortunate events are never intended. If this one materializes as feared (I hope I am wrong), the architects are certainly extremely clever tacticians.
•  This outcome, however, can still be prevented. Bill S-4 can be fixed in "the other place". A very wise law professor of mine named Harry Glasbeek said that any new statute or Supreme Court decision should be judged in light of the worst, most absurd and unintended consequence that could ever possibly result – because one can be sure that it will happen and sooner rather than later.

HPK

Howard Knopf v Roanie Levy Concerning Access Copyright - the May 29, 2014 Debate Video

So, here's the video of the debate between me and Roanie Levy (CEO of Access Copyright), which took place on May 29, 2014 at Brock University as part of the "learneds" social sciences conference.

HPK