Saturday, July 25, 2015

Access Copyright Gets its Wish for a Post-Secondary Tariff Hearing at the Copyright Board


Access Copyright (“AC”) is finally getting what it wishes for, which is a consolidated hearing at the Copyright Board on its post-secondary tariffs for 2011-2013 and 2014-2017.

Here is a recent Notice from July 3, 2015 from the Copyright Board regarding Access Copyright (“AC”):
From: <>
Date: Fri, Jul 3, 2015 at 4:28 PM
Subject: Access Copyright - Post-Secondary Educational Institution Tariffs, 2011-2013 and 2014-2017 - Ruling of the Board - July 03, 2015 [CB-CDA 2015-045]

[CB-CDA 2015-045]
In its Ruling of December 4, 2013, the Board denied Access’ application to consolidate the examination of the above-cited tariffs for essentially two reasons. First, the Board did not want to disrupt the then current proceedings in respect of the period 2011-2013, slated for a hearing that was to begin two months later, by adding new issues for examination. Second, it did not want to be in a position to have to certify a tariff for the period 2014-2017 on “what may happen” in a then potentially unstable market.
The first reason is now moot, and the second, much less relevant. Parties are now in a better position to provide useful information on this new, 2014-2017 period. In addition, both Access and Mr. Maguire agree that the consolidation would reduce costs for the parties. The Board thus confirms the consolidation of the examination of the above-cited tariffs.
Mr. Maguire’s application for intervenor status is granted. Access Copyright did not object to Mr. Maguire’s request.
No later than Wednesday, July 8, 2015, Access Copyright shall propose a process and a schedule for a hearing to start on Tuesday, January 19, 2016. This process should minimally provide for the filing of a supplementary statement of case by Access, the filing of a supplementary statement of case by Mr. Maguire and a reply case by Access. Mr. Maguire is allowed to respond to Access’ proposed process and schedule no later than Friday, July 10, 2015.
Finally, Access shall provide answers to the Board’s questions of June 3, 2015 (attached, for convenience) as part of its supplementary statement of case.
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 
          (highlight added)

In a subsequent Notice from the Board dated July 15, 2015, the Board sets out further deadlines:
  • Access Copyright is to file its supplementary case no later than Friday, October 30, 2015;
  •  Mr. Maguire is to file his supplementary case no later than Friday, November 27, 2015;
  • Access Copyright is to file its reply case no later than Friday, December 18, 2015;
  • Hearing is scheduled for Tuesday, January 19, 2016 at 10:00 a.m. in the Copyright Board’s Hearing room.
So, there will be a consolidated hearing for the proposed tariffs for 2011-2014 and 2014-2017 and it will start on January 19, 2016. At issue could be, amongst other things:
  • Fair dealing
  • Substantiality
  • AC’s repertoire and lack thereof
  • AC’s chain of title to the rights it purports to license
  • Whether any AC post-secondary tariff can be a “mandatory tariff”

Interestingly, AC in its letter of June 16, 2015 indicates that:
As the Board is aware, Access Copyright licensed post-secondary institutions under consensual agreements in the period 1991 to 2010. Beginning in 2011, a number of post-secondary educational institutions chose not to renew their licences with Access Copyright. Some institutions paid royalties under the Interim Tariff approved by the Board but have since stopped making those payments.  
Access Copyright has a number of licences in place in the post-secondary sector that are due to expire at the end of December 2015. Some of those institutions have already given notice that they will not renew their licences upon expiry. Access Copyright projects that its royalty flow from the post-secondary sector will be virtually eliminated as of January 2016.
          (highlight added)

AC provides no information in this letter about take-up of its “Choice” and “Premium” license packages, but the foregoing statement suggests that the response has been virtually zero, since AC is projecting “that its royalty flow from the post-secondary sector will be virtually eliminated as of January 2016.”

Notably, Access Copyright will now be required to answer the Board’s clearly pertinent questions posed in the Board’s the Board’s Order of June 3, 2015.  These include questions about the “Premium” and “Choice” offerings and the state of AC’s licensing negotiations.

It is also notable that Mr. Sean Maguire, a university student, is continuing as an unrepresented “intervenor”. He is to be commended for his interest and persistence. However, his involvement can hardly be considered to be a proxy or even a remote substitute for representation of the public interest generally or the post-secondary educational sector and does not change the fact that these hearings are proceeding by way of default for all realistic purposes. One would have expected that the interests of the college and university communities should have been represented by their respective associations, namely ACCC (now Colleges and Institutes Canada) and AUCC (now Universities Canada), which presumably had the resources (assuming the resources were well managed) and the responsibility to confront AC in this normally adversarial arena.

However, these associations are notably absent now, having long ago withdrawn as objectors, and having also withdrawn their objections.  As I have pointed out several times, AUCC and ACCC had already by mid-2012 spent almost three million dollars ($3,000,000) that we know about to accomplish apparently little if anything other than providing a huge amount of interrogatory information for the benefit of AC and reaching model agreements that have been widely rejected by their own members. Even this amount of expenditures may not have been necessary if the associations had taken advantage of the Board’s well-established policy of requiring only “a reasonable amount of relevant information, from a reasonable number of institutions…”, which I have pointed out many times before, including here.

There are also some interesting parallel developments underway elsewhere in the Federal Court concerning the AC v. York U litigation. The trial in that matter is set to begin on May 16, 2016 and is scheduled to last for 15 days, which is a rather long time for a trial in the Federal Court. I will refrain, for the moment, from further public comment about the potential interplay between the Board case and the Federal Court case and how all of this could potentially affect the post-secondary community.

The Board has been thrust into a difficult position here “twixt a rock and a hard place”. This is a result of the apparent over-reaching of Access Copyright and the apparently underwhelming efforts of AUCC and ACCC.

The Board seems to have lately increasingly realized that it can and should, when appropriate, exercise inquisitorial powers (i.e. to ask its own questions and do its own investigations) in order to deal with the lack of submissions or inadequate submissions or evidence from one or more parties. As long as the Board ensures procedural fairness, this kind of approach is not only OK. It may indeed become more common and potentially necessary – not only when hearings proceed by default but when there are inadequate adversarial efforts as we have sometimes seen, even when large amounts of money have been spent. Will this be how this case plays out? I would not be surprised.

Access Copyright has long had an opportunity to negotiate a useful licencing scheme at a reasonable rate for post-secondary institutions. This would almost certainly have been a transactional license-based system, since AC may have serious problems with its entitlement to blanket license the repertoire for which it purports to claim entitlement. I debated this and related points with AC’s CEO Roanie Levy over a year ago at Brock University.

Instead, it is pressing ahead for a consolidated blanket license-based tariff hearing and seeking some arguably highly overreaching tariff rates for rights that it arguably doesn’t have for repertoire that it arguably doesn’t have – and, of course, wants these tariffs to be retroactive and “mandatory”. Indeed, AC is pressing for a result that is apparently very inconsistent with the Board’s recent provincial government tariff, not to mention considerable and consistent Supreme Court of Canada jurisprudence.  For university students, AC wants $35 per year for the period 2014-2017. That is approximately 70 times or 7,000% higher than the current rate for provincial government employees. While one can conceive that there is more copying per capita in universities than in government, it is also conceivable that AC’s share of the relevant repertoire in universities is even less than in the government realm and that fair dealing is even more applicable, especially given the inclusion of the word “education” in s. 29 of the Copyright Act in 2012.

Moreover, AC has just released an obviously very expensive study from Price Waterhouse Coopers  predicting doom and gloom in the Canadian publishing industry and the Canadian educational sector as a result of “the education sector’s interpretation of “fair dealing”.  See the dramatic downward spiral graphic from AC above, announcing this study, the most interesting and useful part of which may be the final “limitations” section at page 96 which includes the statement:
The findings of this Assessment are conditional upon such completeness, accuracy and fair presentation of the Information, which has not been verified independently by PwC. Accordingly we provide no opinion, attestation or other form of assurance with respect to the results of this Assessment.

AC will probably try to put this report in front of the Copyright Board. Of course, ACCC (now Colleges and Institutes Canada) and AUCC (now Universities Canada), have both long since withdrawn from this hearing as noted above and won’t be there to object or to do to the heavy lifting of cross-examination or to offer any responding evidence if the report is allowed in as evidence. Hopefully, if the report is somehow allowed in, the Board will at least have some appropriate questions. An excellent starting point for questions about this “sky is falling” approach is the three-part detailed analysis by Prof. Ariel Katz from about a year ago, aptly entitled  The Loss of Access Copyright Royalties and the Effect on Publishers: Sifting Fact from Fiction, the last part of which is here, with links to the earlier instalments. Ironically, the current PwC study is locked up tight for cutting and pasting purposes – thereby inhibiting “access” to a significant degree. Thank goodness for OCR technology. Further comments may follow from yours truly and others.

So, AC is getting its wish for an oral hearing on its proposed post-secondary tariffs. By pressing for such a hearing, all the while apparently ignoring the wishes of its best customers (and even suing one of them to set an example), the public interest, and the rulings of the Copyright Board and the Supreme Court of Canada, AC may learn that, when it comes to certain copyright matters, it’s important to be “careful what you wish for”.


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