The
ALAI symposium on the Copyright Board of Canada – Which Way Ahead took place on
May 25, 2016 in Ottawa. I will not summarize everything that everyone said.
There was a lot and most of it was quite good. These are just a few highlights
that I can remember in no particular order. It was a constructive conference
and I hope it was archived and will be webcast soon.
The
conference opened with a fairly lengthy speech with fairly familiar content by
Prof. Marcel Boyer, O.C., who is a frequent music industry expert witness at
the Board. He essentially restated his expert evidence on the valuation of
music in the commercial radio context, which has also
formed the basis of a C.D. Howe Institute paper. It is interesting that the C.D. Howe Institute would
publish, as a peer reviewed paper, a document that Prof. Boyer himself admits
“builds on testimonies I provided over the years as an expert witness before
the Copyright Board of Canada and the supporting reports that I
co-authored”.
Prof.
Jeremy de Beer then moderated a panel in which he took a major role himself,
including a laminated handout, complete with a QR code, summarizing his
government funded study published last year, which I have written about at length and, with respect, great
skepticism. Here is his QR code, which is one way to get to his study,
if you want to read it on your smart phone.
This
is my first experience with the use of a QR code by an academic.
According
to Prof. de Beer’s methodology, “every certified tariff
was broken into its constituent components and subcomponents, dissected by year,
number, and letter (where relevant).” This leads to the confusing, arguably
counterfactual and certainly counterintuitive conclusion that:
The Board certified 852
different tariffs in respect of the 15-year study period
between 1999 and 2013. Only 8 proposed tariffs were not certified. There remain
209 tariffs proposed during that period but not yet certified. When (and
assuming) those tariffs are eventually certified, the Board will have dealt
with more than 1050 tariffs applicable to the 15-year period since the 1997
legislative amendments entered into force. That amounts to more than 70 tariffs per year on
average. (emphasis
added) (footnotes omitted
Such astonishingly high
numbers of tariffs may be useful for generating sufficiently large numbers to
apparently justify some sort of presumably expensive statistical analysis of
Board activity. But such an arguably
artificial methodology, dependent on dissection, unfortunately obfuscates the
actual numbers that really matter and exaggerates the ones that do not. The
really important numbers, using the Board’s own taxonomy, as seen below, are
quite probably much too low to be susceptible to statistical analysis.
This methodology also
leads to a result that makes the Board look considerably more productive in a
quantitative numerical sense than even the Board itself has ever claimed.
Interestingly, however, even the Board has begun to use the number “70”, as in
Vice-Chairman Claude Majeau telling
the Industry Committee of the House of Commons on May 5, 2016 that:
On
average, the board issues
about 9 decisions every year, which encompass over 70 tariff units,
including a significant proportion that have been the subject of public
hearings.
Even former Chair William Vancise cannot resist using this new number of “70 tariff units”. In the written text of his speech at the event - see below - he states "On average, the Board certifies over 70 tariff units annually. This volume alone could justify a marked increase in current resources."
Note the Board’s careful new use of the term “tariff units” – in contrast with what it has always called simply “tariffs”. And note that, while these comprise “a significant proportion that have been the subject of public hearings”, it is also true that a significant number of them do not because they are unopposed and often economically insignificant. With respect, these numbers are inconsistent with the taxonomy of what the Board itself has always considered to be a “tariff” and a “decision”, which can be readily seen on the Board’s own website and in its annual reports.
The real numbers
that matter, as I have shown – which are based on the Board’s own actual
numbers from its website - are as follows:
- During the 15 years study period, the Board certified only 74 tariffs, according to its own taxonomy – many of which were uncontested.
- The Board certifies on average 4.9 tariffs per year. This is greater than the number of decisions per year, since many of these tariffs are unopposed because they are unimportant or the objectors cannot afford to participate in the Board’s process, or for other reasons – such as the oppressive and intrusive interrogatory process.
- The Board normally renders only about two or three important decisions per year. It is entirely unclear where the figure of “9 decisions” comes from.
- It often takes four years or more for a contested tariff to get to a hearing.
- If often takes two years or more for a decision to be rendered after a hearing. Here are recent example of post-hearing pendency delays before a decision was rendered:
•
Commercial
Radio = ~ 30 months
•
K-12
I = ~ 24 months
•
K-12
II = ~ 20 months
•
Fitness
= ~ 26 months
•
Re:Sound
Tariff 8 (“Pandora”) = ~ 18 months
•
SODRAC
Tariff 5 = ~ 30 months and has now been
remitted by SCC
•
Access
Copyright Provincial Tariff = ~ 30 months
•
CMRRA/SODRAC
Inc. (CSI) Tariff (2011-2013);
SOCAN Tariff 22.A (2011-2013;
SODRAC Tariff 6 (2010-2013) – still pending since November, 2013
SOCAN Tariff 22.A (2011-2013;
SODRAC Tariff 6 (2010-2013) – still pending since November, 2013
I presented these
numbers at the ALAI event and nobody took any issue with them. Two or three decisions and 4.9 tariffs per
annum do not require or even permit any application of statistical methodology.
With only two or three decisions and
4.9 tariffs (by the Board’s pre-de Beer analysis) a year coming from the Board,
there is no basis for statistical analysis and absolutely no basis for further
analysis, as Prof. de Beer suggests:
At the present time, it is simply unclear whether the
Copyright Board is now settling into its role and the process is becoming
faster, or whether the complexity continues to grow and the tariff-setting
process is in fact taking longer than it was several years ago. Only more time, and more data,
will tell.
It does not require even simple arithmetic to see that the Board often takes at least six years to deal with its
contested tariffs – and that is before the now seemingly inevitable judicial review. Unfortunately, I must conclude that Prof. de Beer’s study
obfuscates these numbers. It seems that everyone other than him, and even the Board’s
retired Chairman Justice Vancise, seems to acknowledge that it is often taking
the Board 24 months or even longer to render a decision after a hearing, and
that the hearing may have been four years or more in the making. We don’t need
any more statistics or study to get that point. As for the dozens, or hundreds
or however many other unopposed, and usually economically insignificant “tariff
units”, we also don’t need more statistics or study. There is clearly a
management problem at the Board in dealing with these kinds of routine files –
and the implementation of regulations imposing deadlines on the Board would
seem to be the only reasonably assured way to solve the problem.
But even the shortened average
timelines in Prof. de Beer’s study, which do not reflect the above reality, are
still cause for concern, as was apparent at the ALAI event. This was evident in
the response of Jason Kee of Google and others who spoke for powerful
interests, who emphasized that new technology moves very quickly and delay and
retroactivity are serious concerns, even for an enterprise as powerful as
Google. Also on Prof. de Beer’s panel was Prof. George Barker, a regular expert
at the Board for the music industry – who somewhat surprisingly and frankly pointed out that calls for greater resources
should be viewed in light of the inherent self-interest of every government
institution and those who manage it to call for more resources. Stephen Ellis
of the Canadian Retransmission Collective pointed out that delays and
retroactivity can case great problems even for the beneficiaries of such as
lucrative tariff as retransmission, where there have been serious problems in
the allocation of money years after the fact due to delay and retroactivity.
A
new study commissioned by the Government from Prof. Paul Daly was briefly
discussed and was the centre piece of a panel moderated by Mario Bouchard,
former General Counsel of the Board. The
Daly document:
1. Proposes that the Board
should be able to award costs. This suggestion was dismissed by retired
Chairman, William Vancise, who noted that, during his tenure, he had not observed
any egregious behavior on the part of parties or their counsel and that he
could see no reason for a cost award regime. It would seem obvious that
collectives never get what they ask for – and this alone would hardly seem to
be the basis of awarding costs. Prof. Daly provides nothing specific on this
inherently controversial suggestion.
2. Proposes a number of
fairly obvious recommendations about case management, to be dealt with through
regulations proposed by the Board itself and approved by the Governor in
Council including the early exchange of Statements of Case. The report stops short of suggesting or even
considering regulations directly from the Governor in Council that could be far
more potent and effective.
3. Recommends that the
current Directive on Procedure be retained.
4. Recommends that “the
Copyright Board should continue to attempt to effect culture change through
informal changes – including a ‘Best Practices’ manual for (a) conducting
discovery, (b) introducing expert evidence and (c) conducting a hearing – and
persuasion”
5. Recommends further study
“with a view to developing a metric which would propose benchmarks for the time
periods within which regulatory decisions ought to be rendered”
The
study contains some useful, even if fairly obvious, references and commentary
regarding some other tribunals. The study stops far short of suggesting time
limits, qualifications of Board members, etc. or anything else of any
specificity that would have any significant impact. This frankly restrained and inconclusive
study will neither cause much offence nor lead to much change, even if
followed. Like so many other consultants’ studies, it mainly seems geared
towards the need for further study.
Something more concrete would have been more useful.
Interestingly, there is no consensus
overall on the widely asked question of why the Board, unlike any other court
or tribunal of which I am aware, allows discovery to take place – sometimes
seemingly endlessly and without apparent limit – without requiring a collective
to file at least some specific basis of the factual and legal underpinning of
the reason why it is seeking to collect millions of dollars a year – up to
$200,000,000 per annum in the current retransmission case. Likewise, objectors
should state why they are opposed. In my experience, the objectors do a better
job of this at the beginning, even under the present unregulated system, than
the collectives.
Even
veteran counsel on both sides of the fence do not agree that anything
approaching the equivalent of a “pleading” or “notice of application” should be
provided up front – which is what normally happens everywhere else. For my
part, I asked why an organization such as SOCAN that has been around for about
90 years and knows very well how the radio and other copyright intensive
businesses work, cannot figure at the outset at least the basic factual and
legal underpinning of tariffs that could cost it and any objectors millions of
dollars to determine and hundreds of millions of dollars to users who have to
pay. No court would tolerate such vagueness and lack of particularity –
especially from such sophisticated and ultra-experienced parties. Fishing
expeditions are not generally tolerated in the justice system – especially when
the fish are endangered species.
Several
speakers noted the potential financial costs of delayed and highly retroactive
decisions, and of course the obvious fact that technology and business
practices change so quickly that the uses dealt with by a tariff may be
obsolete long before the decision is rendered. A year is a very long time when
it comes to things like webcasting, streaming, downloads, etc. Six years or
more is an eternity in today’s business world and particularly so in the
digital technology space.
I
know of no other board or tribunal in Canada that takes so long to hold a
hearing or render a decision. Judge David Strickler, from the US CopyrightRoyalty Board (“CRB”), explained that his Board, which has a support staff of
only two professionals and one administrative person, is required by statute to
render decisions by certain tight and specified deadlines – and it does so.
That
is because it has no choice. It’s also notable that the US law requires that
all three CRB judges be lawyers, that one has expertise in economics, and one
have expertise in copyright law. They presumably hit the ground running. The
CRB’s decisions can be much longer and more detailed than those of Canada’s
Copyright Board – and issue much quicker. There seems to be much less recourse
afterwards to the Courts.
I
pointed out that Canada’s sui generis
Patented Medicines Notice of Compliance regime cases must result in a written
judgment decision within 24 months from the start of the application. This is
required by law. The cases can be very complex both technically and legally,
involve up to ten experts and may involve far more money than many of the
Copyright Board cases. The Federal Court routinely disposes of several dozen of
these invariably complicated cases each year – and invariably within the time
limit set by regulations – 24 months from start to finish. A substantial number
of these dispositions involve hearings with voluminous applications records,
and can result in very lengthy decisions replete much science and much law. For
example, here’s a PMNOC decision
released today that’s 132 pages long (in English) with several
diagrams of molecules and other arcane discussions of pharmaceutical chemistry.
The
Federal Court now has set the norm that even the most complicated cases should
be heard within two years of commencement and a judgment rendered within 3 or
four months afterwards. The Supreme Court of Canada normally renders its
judgments in less than six months after a hearing. All of this data was in my
slide show – see below.
The grand finale of the day was a
rather intense speech by retired Justice Vancise with some interesting
reminiscences. He is still “seized” of a couple of files if I heard him
correctly, even though he retired over two years ago as Chair of the Copyright
Board. A written version of his talk is available here. It
lacks some of the frankness and colourful and sometimes even personally
specific spontaneity of his actual remarks. Whether one agrees or not with
everything Justice Vancise has to say, his enthusiasm, impassioned and
sometimes outspoken rhetoric – both written and verbal - on what he believes to
be right are certainly noteworthy and unusually interesting for a sitting or
former jurist. Michael Geist has also commented on his talk.
While Justice Vancise claimed to be
speaking only personally and not for the Board, he was very explicit in
concluding with a plea for a “consensus” that the Board needs more money so
that that Board can hire more people. He suggested that some of the changes in
the 2012 legislation, such as making available right, the user generated
content and parody provisions will expand the workload of the Board. I frankly
do not understand this point. Most, if
not all, of these amendments will conceivably have only a potentially marginal
effect on tariffs that are no longer de
jure or even de facto “mandatory”.
Laws evolve – it does not necessarily follow that boards and tribunals
need to expand to keep up with this evolution.
In the case
of the Copyright Board, the Board is normally blessed with party briefs from
some of the best and best paid copyright counsel in Canada – except where
parties withdraw or choose not to participate, for whatever reason. The Board
also has four very capable lawyers on staff full time – which is more lawyers
than the number of significant decisions that the Board normally issues each
year. Indeed, for whatever reason, as the Board’s legal staff gets larger, the
delays seem paradoxically to get longer.
With respect, I believe that more
money and more people for a Board that already has a staff that is already 500%
larger than its US counterpart and
substantially larger than Canada’s Competition Tribunal will only slow things
down even more. This may even increase the likelihood of administrative law
challenges based upon failure to disclose
background briefing material and the important maxim that “S/He who hears must
decide”.
At the end
of the day, what is needed are regulations setting out deadlines and
procedures, including case management, that bind not only the parties but the
Board. All comparable court and tribunals operate this way. There is nothing
unusually complicated about copyright law or rate setting that would justify
the culture so clearly entrenched at the Board that assumes that its cases are
uniquely complex and require so long and so much resources to determine. Much
of this culture is no doubt attributable to some veteran counsel who may
understandably be in no hurry to be in a hurry. Long cases usually result in
bigger bills than short cases – unless, of course, the client reaches the
breaking point and withdraws or declines to engage altogether. And, in many cases, even the objectors are
under no great pressure to minimize costs because legal costs can be passed
along, at the ultimate expense of both creators and the general public who pays
a bit more for cable bills, or a “wedding tax” each time they get married.
Moreover, as Justice Vancise pointed out, tariffs such as the “wedding tax”
occasionally make headlines and cause much political consternation.
This
culture has also resulted in an attitude on the part of some that the Federal
Court of Appeal and even the Supreme Court of Canada should be more deferential
to the way the Board works and the results it reaches. The implication that the
Board and some of the regular counsel and experts who appear before it are so
expert in copyright law that the courts should keep their distance more so than
usual is not only inappropriate. It is also symptomatic – and perhaps even a causal
factor – of the Board’s unsustainable isolation from the comparable
international norms of the regulation of copyright collectives, or any other
comparable kind of economic regulation, such as antitrust.
The
Copyright Board already gets special treatment in terms of judicial review in
Canada, being one of the few elite tribunals whose cases go directly to the
Federal Court of Appeal. The Copyright Board should welcome – rather than try
to avoid – the teachings and guidance of the Federal Court of Appeal and the
Supreme Court of Canada, which have provided very constructive and often
essential guidance and occasional correction to the Board.
There were some other interesting themes that came
up during the day. There was some interesting discussion later on about the phenomenon of “expert”
witnesses who have appeared over and over on behalf of the same clients at the
Copyright Board and whether some of them might fail to be “qualified” in the
normal courts due to a perceived or perhaps even actual lack of independence. I
am not suggesting that this concern applies to any particular person. However,
even Justice Vancise and others acknowledged the issue later in the day and
Justice Vancise even mentioned one or two individuals by name.
I
emphasized that the recent Supreme Court decision in CBC v. SODRAC will force the Board to establish tariffs that
will have to be attractive to users, once
users understand and accept that tariffs that are not “de facto” mandatory can be ignored if there is a better and cheaper
way to clear their copyright needs. The SCC’s footnote about retroactivity is
also an important signal that should be noted by the Board. Overall, I am
firmly of the belief that we do not need more studies about the Board – unless
they are directed towards specific recommendations for solutions based upon
comparative best practices and benchmarks.
The problems and all the essential numbers are already known, as I have shown. And the
experience of the US Copyright Royalty Board
is transparently available. Also, the Canadian Competition
Tribunal – which is receiving increasing
attention as a comparative model – is also readily transparent on its excellent
website. It’s time for sensible and sustainable solutions – not more
inconclusive studies.
My modest
suggestions for solutions, which might include the option of merging the Board
with the Competition Tribunal, are set forth in my Ficsor-length slide
presentation, which follows. I somehow managed to get through all of it in my
allotted ten minutes:
In conclusion,
this was a good conference. Overall, there was general agreement that things
need to move much faster and cost much less at the Board – but little agreement
on how to get to this result.
There was
much frank discussion. But it was all cordial and well balanced. Even Ariel Katz and Barry Sookman agreed with
each other on one or two points, such as the desirability of competitive market
based licensing. Justice Vancise and I also agreed on the inappropriateness of
the Music Canada campaign to lobby the new Chairman. Indeed, Judge Vancise was
even more outspoken than me on this point, using the words “completely
unacceptable”.
ALAI is to
be thanked and congratulated on this major event in Ottawa. One hopes to see
more such conferences in the future.
HPK
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