Saturday, May 26, 2018

Harmonizing Tariff Regimes and Statutory Minimum Damages: A Wolf in Sheep’s Clothing? UPDATE


May 31, 2018 UPDATE of original post from May 26, 2018

I’m hearing that the Government is planning to table legislation concerning the proposal below before the House of Commons recesses for the summer. This could come the week of June 18, 2018.

If I am right about what the bill will try to do, the current Ministers and those of their staff and officials who are not familiar with the intensity of controversy that a bad copyright bill can arouse are in for a very unpleasant surprise. There are millions of voters who will not react well to a new “tax” on education that will increase costs and limit access to knowledge and inhibit innovation. This Government may have a majority and can pass any bill it wants in the House of Commons. But the Senate may not be so compliant and there will be millions of affected voters who will have an opportunity to express their views on a new “education tax” in November of 2019.

And, just to remind everyone, “education” is a provincial matter under Canada’s Constitution.

Giving the Copyright Board another million dollars a year was a bad idea because it will only slow things down even more and create the potential for administrative law challenges because the decision makers will likely have even less role in deciding decisions. However, harmonizing statutory minimum damages and maybe even tariff regimes on the fly at the behest of a very unpopular collective which wants a legislated business model that would give it a monopoly right to to threaten draconian litigation against its best customers is an infinitely worse idea. It could prove to be the worst copyright policy initiative in the long and often painful history of Canadian copyright law.



May 26, 2018
There is a very pernicious proposal afoot which some federal bureaucrats have been led to believe will help to fix things up at the Copyright Board by harmonizing tariff regimes, or at least the statutory minimum damages provisions available to collectives.

I have not seen the documents provided to the Government or the Government’s own internal documents. However, it seems apparent that this effort is being pushed by Access Copyright and is at best disingenuous and at worst deceptive, misleading and dangerous. Above all, it seems clear that this proposal, despite its ostensible purpose, has nothing whatsoever to do with fixing the Copyright Board – and would make things even worse in that respect, as I explain below.  Indeed, it would appear that there is a very different and ulterior motive behind this proposal.

There are provisions in the current Copyright Act that allow SOCAN to go after statutory minimum damages of three to ten times the tariff amount. So, if a recalcitrant bar or restaurant doesn’t want to pay $150 per year in applicable royalties, it can be threatened with up to $1,500.  A reasonable settlement will usually be reached. Not a big deal.  SOCAN tariffs are “de facto”, even if not “de jure”, mandatory – if the bar or restaurant wants to play contemporary popular music. If that’s what it takes to encourage bars and restaurants to pay for music, then so be it.

Now, however, Access Copyright is trying to convince – some might say to “con” – the government into making the same kind of 3 to 10 times regime applicable to educational institutions. The regime that applies to Access Copyright is not remotely comparable to the SOCAN regime. Access Copyright has comparatively little repertoire and offers comparatively very little in value to educational institutions, which is why so few are voluntarily signing licenses with Access Copyright anymore. Michael Geist has recently been documenting how institutions are spending a great amount of money to clear their copyright requirements – but they are spending it in other more productive and efficient ways than on Access Copyright. There is no reason for any institution to pay more than once for any required permission. The notion that a big university can be intimidated with a potential liability of 3 to 10 times the total amount of a tariff that didn’t’ need to be paid in the first place and resulting in a threatened liability of many millions of dollars is nothing short of offensive and scandalous.

This amendment would seem to be intended to intimidate educational institutions into believing – or maybe even to legislate in such a way –  that just one unauthorized copy of one single work in Access Copyright’s rather limited repertoire could result in liability of three to ten times the amount of a tariff, notwithstanding that the Supreme Court of Canada has ruled in CBC v. SODRAC that such tariffs are NOT mandatory for users.  (The Federal Court did not read the Supreme Court’s decision that way in the Access Copyright v. York University case, but the Federal Court’s decision is under appeal.) Access Copyright wants $26 per FTE student per year. In a bigger university, there are well over 50,000 students. That’s more than $1,300,000 per year and the Copyright Board makes everything retroactive by several years because it is very likely the slowest tribunal in Canada and perhaps anywhere else. The Copyright Board is still cogitating Access Copyright’s 2010 tariff proposal for post-secondary – that’s 8 years and counting with no endpoint in sight. That’s unheard of in Canadian tribunals or courts.

This is nothing short of an end run around the appeal process in the Access Copyright v. York University  litigation, which many believe that Access Copyright will likely lose in the Federal Court of Appeal – and/or ultimately in the Supreme Court of Canada. That prospect may be behind this initiative, which is dressed up to look like Copyright Board reform. In turn, it’s  also an end run around the Supreme Court of Canada’s 2015 conclusion in CBC v. SODRAC, which held that “the statutory licensing scheme does not contemplate that licences fixed by the Board pursuant to s. 70.2 should have a mandatory binding effect against users”, a fundamentally important ruling that arguably should have brought a quick end to the York University litigation. (Yes – I’ve been involved in both these cases).

It’s also a shocking end run around the whole s. 92 Copyright Review process. This would be a monumental legislative change by stealth to a system that has evolved with great care and deliberation over a period of 80 years.

Above all, it has nothing whatsoever to do with fixing the Copyright Board. Virtually all of what needs to be done to fix the Copyright Board in the medium term can and should be done by regulations pursuant to the existing legislation. Bureaucrats who believe otherwise are, with respect, simply wrong. See my submissions to the Senate and to the Government.

Indeed, this proposal would only make things worse at the Copyright Board because lots of parties would feel obliged to mount strong and expensive objections if there is any serious concern about possible liability for multiple times the cost of a so-called “mandatory” tariff – and the possible retroactive imposition of such a tariff.

It’s very disappointing that this proposal is being given ANY consideration. It should have been screened out before it took up anybody’s time. If it does see the light of day in a bill, there will be a massive and messy opposition to it from many of the millions of people involved in the educational community.

Ill conceived copyright policy and especially legislation can be toxic to politicians, as Sheila Copps, Sarmite Bulte, the late Jim Prentice, and others have learned to their considerable chagrin. Unfortunately, today’s Ministers are apparently getting some very bad advice on this issue from some of their bureaucrats.

These are my own personal opinions and not necessarily those of any client – but I know that they are shared by other knowledgeable people.


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