My Speaking Notes for Senate BANC Committee November 21, 2018 re Copyright Board

Howard Knopf Speaking Notes for Senate BANC Committee November 21, 2018

Here is the webcast of this hearing. My opening remarks occur at 14:49.  There were some very good questions, and presentations from Jeremy de Beer and Casey Chisick.

The following are my speaking notes. The final transcript is not yet available.

PROBLEMS WITH BILL C-86 APPROACH TO BOARD REFORM

1.   Thank you for the invitation and the opportunity to compress nearly 40 years of experience into 5 minutes.  Frankly, an omnibus bill approach to all these complex and controversial IP issues is absolutely NOT the way to proceed here and is unnecessary and unacceptable. There are many serious issues and problems with the nearly 100 pages of IP material in Bill C-86 but I was only invited here to talk about the Copyright Board. This is in some respects the most drastic change to the Board since 1936 and it is getting only an hour or so of Committee consideration here and much less in the other place.

2.   The clarification of criteria – including the inclusion of the terminology of “public interest” and “willing buyer and willing seller in a competitive market with all relevant information, at arm’s length and free of external constraints” may actually backfire. This will formalize in an untested and unprecedented manner what has been an informal exercise that has often resulted, for better or worse, effectively in the averaging of two extreme sets of numbers – and will almost certainly result in even more expensive and time-consuming so-called “expert evidence” about something that is circular at best and paradoxically impossible at worst – which is that determining a competitive market rate. There is no such thing as a competitive market in a world where mandatory tariffs can be set by law for the benefit of powerful monopolies that would otherwise be criminal conspiracies were they to exist without the blessing of Parliament and the Copyright Board and the Courts. Moreover, the concept of “public interest” may potentially conflict with that of a “competitive market”. We can expect longer and more expensive hearings and more judicial review in figuring out what, if anything, this will all mean.

3.   As for the commendable idea encouraging public participation without incurring the costs of full participation as indicated in the Government’s Fact Sheet, that appears to be more talk than action. If the Government means reimbursement for costs of public interest participation, that would require enabling legislation as we have with the CRTC. But that enabling legislation is simply not there in this bill.  

4.   As to streamlined timelines, the Bill simply doesn’t deliver. Moving up the filing date by 5.5 months and making tariffs last three years rather than one won’t make any difference to the fact that it usually has taken about four years for a hearing to even take place and there are few if any examples of “annual” hearings on the same tariff. It then typically takes the Board 3 years to render a decision, which is then very retroactive, and which often results in judicial review and even rehearings. Contrary to what you heard earlier today and my friend Prof. de Beer, the Board normally certifies fewer than 5 tariffs a year.

5.   The enabling legislation for regulations to specify time lines has already been there for at least three decades – and still hasn’t been used. The setting of deadlines and timelines have still been postponed and punted again. This bill does nothing to impose necessary deadlines, as we have for other tribunals and in the Federal Courts as set by the Governor in Council – for example in the case of the Federal Courts and the Competition Tribunal, which incidentally will have a much smaller budget than the Copyright Board.

6.   The bill will eliminate the requirement for music industry collectives to file tariffs that require Board oversight – even if there is no opposition. This has been a requirement since 1936 following the monumental Parker Commission Report. That means that the music industry will have even more effectively unchecked monopoly power over organizations ranging from hockey stadiums and movie theatres OTOH to barber and beauty salons OTOH. No wonder SOCAN and Re:Sound have been so quick to welcome this Bill.

7.   The elephant in the room here, of course, is the overwhelming question of whether Copyright Board tariffs are mandatory for users. I successfully argued in the SCC that this is not the case. It’s one thing for the Government to provide a train or plane tariff to get from Ottawa to Toronto – as once was the case. But, the Government never forced anyone to take either the train or plane if they wanted to take the bus or drive their own car. However, in the Access Copyright v.  York University case, York did not address the issue of whether final approved tariffs are mandatory. Let’s hope that the FCA gets this right. It will likely end up in the SCC. The issue is certain to arise in the s. 92 hearings as well. So, in this regard, I’m a little concerned about the purpose or need for the new s. 73.1 which imports language from the “mandatory” levy scheme in Part VIII of the act re enforcement of “terms and conditions”?

8.   I’ll be happy to answer your questions.

HPK

My speaking notes for my presentation to the House of Commons INDU Committee for its s. 92 Statutory Review of the Copyright Act

Here are my speaking notes for my presentation to the House of Commons INDU Committee for its s. 92 Statutory Review of the Copyright Act. Here’s the webcast. My introductory remarks are at the 16:23:14 mark. There were good submissions as well from Marcel Boyer, Mark Hayes and Jeremy de Beer.

Introduction

I’ll try not to repeat what I’ve said in the last week to the Senate BANC committee and yesterday to the CHPC committee. But I will repeat one thing I said yesterday which was this:

There’s no “Value Gap” in the copyright system. However, there’s a serious “values gap” in the fake news that is being disseminated these days about IP in general and Canadian copyright revision in particular.

Today I’ll talk about a few other issues and flag some that I’ll include in more detail in my written brief due December 10, 2018.

1.   We need to clarify that copyright board tariffs are not mandatory for users

The elephant in the room is the issues of whether Copyright Board tariffs are mandatory. They are not. I successfully argued that case in the SCC three years ago – but most of the copyright establishment is in denial or actively resisting. A tariff that sets the maximum for a train ticket from Ottawa to Toronto is fine – and we used to have such tariffs before deregulation. But travellers were always free to take the plane, bus, their own car, a limousine, their bicycle or use any other legal and likely unregulated means.

Choice and competition are essential – not only for users but for creators. Access Copyright charges educators far too much for much too little. And it pays its creators far too little – they got an average of $190 for 2017 from Access itself and from their share of the publishers’ portion.

There is intense litigation ongoing between Access Copyright and York University – now in the appellate stage and other litigation in the Federal Court involving school boards.

Unfortunately, York failed in the trial court to address the issue of whether final approved tariffs are mandatory. Hopefully, the FCA and maybe the SCC if necessary will get this right in due course. But we can’t be sure, and the other side is lobbying you heavily on this issue, including with such devious and disingenuous suggestions as imposing a statutory minimum damages regime of 3 – 10 the tariff amount on the  totally inappropriate basis of symmetry with the SOCAN regime – which is the way it is for good reasons that go back more than 80 years but would be totally inappropriate for tariffs outside the performing rights regime.

I urge you to codify and clarify for greater certainty what the SCC has said in 2015, consistently in turn with previous SCC and other jurisprudence going back decades – that Copyright Board tariffs are mandatory only for collectives but optional for users, who remain free to choose how they can best legally clear their copyright needs.

2.   We need to keep current fair dealing purposes in s. 29 and include the words “such as”

The SCC had already included the concept of education in fair dealing before the 2012 amendment kicked in. The USA allows for fair use “for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use)” (emphasis added). I ask you to ignore siren calls urging you to delete the word “education” from S. 29 and urge you to add the two little words “such as”, as our friends and neighbours in the USA have had for 42 years.

3.   We Need to Ensure that fair dealing rights cannot be overridden by contract

The SCC has said (Royal Trust v. Potash, [1986] 2 SCR 351, 1986 CanLII 34 (SCC), (http://canlii.ca/t/1ftqp) that consumers cannot lose their statutory rights by contracting out or waiver in the case of, for example when it comes to paying off a mortgage after 5 years. We need to clarify and codify a similar principle that fair dealing rights and other important exceptions cannot be lost by contracting out or by waiver.

4.   We need to explicitly make technical protection measures (“TPM”) provisions subject to fair dealing

We need to clarify that users’ fair dealing rights apply to circumvention of technical protection measures at least for fair dealing purposes in s. 29 and for many if not all of other exceptions provided in the legislation as appropriate.

5.   We need mitigation for the nation

We need to mitigate the damage done by copyright term extension under both the Harper government (as deeply buried in an omnibus budget bill) and by this Government in the USMCA. These concessions could cost Canada hundreds of millions a year – and must be given now to the EU and all our other WT) TRIPs treaty partners because of the most favoured nation and national treatment principles to which Canada is bound. One small mitigation measure might be the imposition of renewal requirements and fees for those extra years of protection that are NOT required by the Berne Convention.

6.   We need to look carefully at enforcement issues.

I know you are under immense pressure from some very well-funded and powerful lobbyists and lawyers on site blocking. I’m not convinced that we need any new legislation on this issue but I’m looking into it carefully and may perhaps write about. In the meantime, you should be looking at the existing (not proposed) provisions in s. 115A of the Australian Copyright Act and UK case law.

We may also need to somehow address the issue of mass litigation against thousands of ordinary Canadians who happen to “associated with an IP address that is the subject of a notice under s. 41.26(1)(a)” and who are alleged to have infringed a movie that could be streamed or downloaded for a few dollars. This litigation is not “akin to a parking ticket”. There are systematic efforts to extract “settlements” of thousands of dollars from terrified internet account holders who may never have heard of BitTorrent until they get that dreaded registered mail letter. These efforts may succeed in many cases because access to justice is very difficult in these circumstances. If the government would do its job on the notice and notice regulations, that might be a good start.

7.   We need to repeal the blank media levy scheme

We need to get rid of the zombie-like levy scheme Part VIII of the Copyright Act and stop listening to the big three multinational record companies who conjure new kinds of taxes on digital devices, ISPs, internet users, the cloud, and whatever else looks lucrative. Even the USA doesn’t entertain such fantasies.  

8.   We need to stop this five years review ritual

We have had two major and two medium scale revisions to Canadian law in the last 100 years a few more focused ones in between. There is no need for periodic copyright policy review. It’s lucrative for lobbyists and lawyers. But it’s a waste of time – including Parliament’s time. Reacting reflexively and prematurely to new technology is usually very dangerous. If we had listened to the whining of the film industry in the early 80’s, the VCR would have become illegal and Hollywood as we know it might have committed economic suicide. Who of us of a certain age can forget the words of Jack Valenti, the famous Hollywood lobbyist, who told Congress “I say to you that the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone.”

Particular issues can be addressed as needed, which is the way most other countries cope with copyright.

*****

Thank you. I look forward to your questions.

HPK

My speaking notes for the CHPC Committee Hearing of November 27, 2018 about Remuneration Models for Artists and Creative Industries

John Kenneth Galbraith  1908 - 2006

(Wikimedia)

Here are  my speaking notes for the CHPC Committee Hearing of November 27, 2018 about Remuneration Models for Artists and Creative Industries 

Audio Webcast here – beginning at ~ 11:47:30

1.     Introduction

The late legendary Canadian economist John Kenneth Galbraith explained the aptly named trickle-down theory of economics as follows. He said:

 'If you feed the horse enough oats, some will pass through to the road for the sparrows.'”

That’s essentially the basis of the copyright system as we know it in Canada. It’s frankly a bit messy. We have about 38 collectives in Canada – which is about six times more than the USA. We have the largest, most expensive and slowest moving copyright tribunal in the world. 

Most of the sparrows get little from this system. Take Access Copyright for example. Based on its 2017 figures, 11,000 creators got $2,090,000 from AC and publishers, for an average of $190 per annum each. That’s less than the hourly billing rate of most junior lawyers these days.

The copyright system can actually be a disincentive to creation. Case in point is Giuseppe Verdi – perhaps the greatest of all opera composers, as documented in a wonderful book by Prof. F. M. Scherer called Quarter  Notes and Bank Notes. And there’s a recent book and article on the sound recording and popular music industry by Prof. Glynn Lunney.

Here are some facts to keep in mind:

·       It is impossible to define who is a professional writer, musician, composer, painter or other creator. I write a lot in my work and outside of my day job. I certainly don’t consider myself a professional “writer”. However, I got paid about $85 this year by Access Copyright– which is more than others I know. It’s always been incredibly easy to qualify as an Access Copyright creator affiliate. Doubling my Access Copyright royalties will mean nothing to me other than a nice lunch for two – but could cost the educational system hundreds of millions of dollars a year.

·       The composers whose works you might hear at the National Arts Centre are lucky to make more than $500 or $1,000 a year from SOCAN. Good thing they get grants and commissions and maybe salaries as a professor if they are lucky.

·       Virtually all professors are writers – and they get well paid for their writing by getting tenure and nice six figure salaries. But only a very small handful – such as Jordan Peterson – make serious money writing books.

·       A trade book selling 5,000 copies is a great success in Canada. The writer will be lucky to get $15,000 from the publisher and a pittance from Access Copyright. I hope they have a good day job.

2.     How digital technology can help artists get paid….

 Digital technology has much potential. Justin Bieber was discovered by his talent manager through his YouTube video cover versions in 2008 and the rest is history. And there’s the recent example of that wonderful 95-year-old Canadian gentleman Harry Leslie Smith who is suddenly a world-wide sensation and who we wish a speedy recovery.

There’s no doubt that artists will find a way – perhaps with the help of Google, Amazon, Shopify or others yet to come – of selling directly online to their fans without signing away their rights and most of their revenues in exchange for recoupable advances and elusive dreams that almost never come true.

But beware of digital delusions and vapor ware. For example, I’m frankly very skeptical about Access Copyright’s latest announcement called “Prescient” that promises the world once again. I’m not holding my breath, based upon its past failures to deliver. Talking about blockchain and machine learning is easy to do. That’s why everyone is doing it.  

Above all – please consider that we are looking at the cultural and knowledge sector, of which copyright is only a component or tool – and not the sector or the end itself. The transportation sector evolved from the horse and buggy to cars. More money got spent on transportation – but it got spent differently. Things change and constantly evolve. Old business models and jobs are not guaranteed – just look at Oshawa. As Universities Canada pointed out the other day and, in its brief, filed with the INDU Committee in June 2018. Canadian universities “are spending more than ever purchasing content: more than one billion dollars in library content in the last three years combined” – based upon Statistics Canada data.

3.     Increased use of the public lending right and similar models

 The Public Lending Right is an excellent program that rewards writers whose works are borrowed from public libraries. Because it’s outside the copyright system, the payments can be restricted to Canadian writers. Sadly, the maximum annual payout has fallen over the years from $4,000 to $3,000. Let’s put more money into this system – and consider Roy McSkimming’s suggestion for broadening the system to include an Educational Lending Right. This would enable payments to Canadian authors of school and college textbooks and other educational materials, including scholarly works.

4.     How collectives can best serve artists?

 Collectives have an inherent conflict of interest when it comes to serving creators. High salaries and high legal fees can only be justified in big organizations with annual revenues in the tens or hundreds of millions of dollars.

Collectives can best serve artists by doing their best to put themselves out of business – or at least by making themselves smaller and smarter - by embracing digital technology. It is simply unacceptable for a collective to spend 25% to 30% of it revenues on administration, lobbying and legal fees.  That’s members’ money.

The Copyright Board should only allow a collective to operate if it does so in the best interest of both creators and users. In all cases, it should require full disclosure of:

•        Actual repertoire
•        Average and median payments to individual creators
•        Salaries of senior officers and in-house counsel
•        Amounts spent on outside lobbyists, lawyers, experts and other consultants together with names

5.     Levies and taxes

 Since 1997 Canada has had a blank media levy system. I have tried on behalf of the Retail Council of Canada to get the Federal Court of Appeal to agree that it’s an illegal tax and very nearly succeeded. As they say, close but no cigar. However, a previous Minister Hon. James Moore agreed with me and in 2010 called proposed iPods, phones and other devices a “tax” and said, “this idea is really toxic and, frankly, really dumb.”

The Copyright Board is inexplicably keeping this zombie tax alive – and allowing the music industry to use the small revues of about $2 million a year – almost 30% of which is spent in administration, including lobbying and lawyers  – ­­­­­­to wait in zombie like stealth for another day to pounce on smart phones, ISPs, the cloud or whatever they can persuade a gullible government  to somehow tax.

The music industry is asking for a new “tax” on iPhones and other devices as well as its proposal for a $40 million per year taxpayer handout until an iPhone type tax can be implemented. Not to mention a recent proposal that would subject broadband data use to a copyright tax.

It’s more than high time to kill off the levy scheme in Part VIII of the Copyright Act and any idea of zombie tax. There’s no “Value Gap” in the copyright system. However, there’s a serious “values gap” in the fake news that is being disseminated these days about IP in general and Canadian copyright revision in particular.

6.     Need to clarify that tariffs are not mandatory

 The elephant in the room is the issues of whether Copyright Board tariffs are mandatory. They are not. I won that case in the SCC three years ago – but most of the copyright establishment is in denial or actively resisting. A tariff that sets the maximum for a train ticket from Ottawa to Toronto is fine – and we used to have such tariffs. But passengers were always free to take the plane, bus, drive my car or ride my bicycle or use any other legal and usually unregulated means. It should be no different with Copyright Board tariffs.

*********

I look forward to your questions

HPK

Follow Up on Bill C-86 – The Omnibus Bill that Amends Canadian IP Law

Bill C-86 has already been given second reading and is at the Finance Committee of the House of Commons. Yesterday, November 7, 2018, in the Finance Committee, there were about 10 minutes in total testimony by Grant Lynds, past President of the Intellectual Property Institute of Canada(“IPIC”) and Michael Geist in his own capacity on There were some subsequent questions. This takes place in the second hour of the webcast.

IPIC is the main professional association that represents intellectual property lawyers and agents in Canada. (I have been a member of IPIC forever and have spoken at many IPIC annual meetings). Michael Geist needs no introduction.

Mr. Lynds made some important points about file wrapper estoppel and how an immediate change may impact pending prosecutions and litigation. He also raised some important points about the proposed College of Patent and Trademark agents.

Michael Geist was largely positive about the package but concerned about the need for regulations re patent and copyright trolling notices and a need for an exception for informational analysis for text and data mining exception.  Michael did not deal at this time with the issue of whether the existing copyright law is adequate to implement the necessary regulations to prohibit the inclusion of settlement demands in s. 41.25 and 41.26 notices. In my humble opinion, it is, and it is inexplicable that this hasn’t been done in the last six years.  The question of patent trolling notices and demand letters is potentially much more complex and controversial and may yet not be ripe for specificity in the form of a detailed statutory requirement or even a regulation.

Both Grant and Michael were invited to provide “one line” drafts of amendments about their concerns.

Their concerns are not necessarily susceptible to one-line cures – at least not without considerable potential controversy. And both have many concerns that go way beyond one-line solutions. And needless to say, these two people – able as they are – can hardly speak for all in the IP community.

Neither Grant nor Michael were critical of the omnibus process of this bill, which was disappointing. Even if they mostly like this bill – apart from the serious concerns both raised which are not fixable by one-line amendments – this sets a dreadful precedent for the future. I’m surprised that neither made that point.

It was noted, if I heard correctly, that amendments must be proposed by November 15, 2018 and “clause by clause” will take on November 20, 2018.

There’s no downside in carving out the 100 pages or so of IP provision in C-86 and putting them into a separate IP bill – for which there are many precedents – which could get a few days worth of necessary, dedicated, and informed committee hearings and debate.

Instead, it looks like this will get literally only a few minutes – with perhaps of couple of “one line” token amendments… that may well be controversial and will certainly deal only with the tip of the iceberg.

There is no precedent in Canadian IP history for this massive bypass of parliamentary democracy. There is no urgency here to justify this departure from democracy.

While none of the provisions are obviously “evil”, some are potentially complicated and fraught with uncertainty and unintended consequences.

On the good news front, the LEGISinfo site indicated that the Senate Banking, Trade and Commerce Committee, which include Senator Joe Day – a former IP practitioner – and which has done good IP work before, for example on the Copyright Board, will hold hearings on the IP part of his bill even before it gets to the Senate.

On the bad news front, it also is unusual for the Senate to do is review in advance and this confirms the unseemly and completely unnecessary haste inherent in this unprecedented and unwarranted omnibus approach to IP law review in Canada.

HPK

Massive Canadian IP Law Reform in a Budget Bill – Throwing Parliamentary Scrutiny Under the Omnibus Bus with Bill C-86

We will not resort to legislative tricks to avoid scrutiny.

Stephen Harper has used prorogation to avoid difficult political circumstances. We will not.

Stephen Harper has also used omnibus bills to prevent Parliament from properly reviewing and debating his proposals. We will change the House of Commons Standing Orders to bring an end to this undemocratic practice.

Justin Trudeau: 2015 Campaign Platform

(highlight added)

Bill C-86, which was given first reading on October 29, 2018, is 884 pages long. It is an omnibus budget implementation bill that touches innumerable unrelated issues and amends dozens of acts. This is not the first Liberal omnibus bill that that breaks an important campaign promise. But it is the longest and most obviously “omnibus” bill to date. To the Liberal’s credit, there is now a procedure to divide omnibus bills with a Speaker’s ruling – EXCEPT notably in the case of budget bills. However, division has apparently even been done recently even in the case of a budget bill based upon a Speaker’s ruling. The NDP now wants this done again.  

Peter Julian MP (NDP) has raised the possibility of such division on Bill C-86 as a point of order. He appears to have a major point, without even focussing on IP. He has called this bill the “the largest and the worst omnibus bill ever presented in Canadian Parliament.”

Omnibus bills raise interesting and even existentially important questions about the democratic process. For example:

• When is it appropriate to use an omnibus bill – even a budget bill – that mixes together so many unrelated issues that may be fraught with complexity and even controversy and may bear only a nebulous relationship to the budget, which in turn may be an artificial berth for such proposal in the first place?  After all, budgets in the Westminster tradition have traditionally been about taxation and other important financial and fiscal matters – not extremely detailed micromanagement of arcane aspects of IP law, for example.
• Even if the provisions are welcome and uncontroversial, how can there be assurance of “quality” of the drafting when there may be only token and extremely abbreviated committee hearings and debate?
• How can Canadian be assured of the advantage of “crowd sourcing” – which is a new term that could be applied to the very old concept of Parliamentary democracy and the law but essential procedure that entails three readings in each of the House of Commons and Senate, detailed committee consideration in both places, floor debate and eventual passage and royal assent? That takes time and is meant to take time. Otherwise, why would we need that big building on Wellington Street known as the Centre Block with its 338 Members of Parliament and 105 Senators?

Many of the IP issues dealt with in Bill C-86 cannot be said to be “provisions that were announced in the budget presentation or in the documents tabled during the budget presentation” as required by Standing Order 69.1(2) so as to prevent division. The Government’s IP Strategy announced on April 26, 2018 along with a promise to spend $85.3 million as part of the Budget  was extremely vague in general and devoid of any specific documents. The few references in it to proposed legislation, in the colourful but non-specific and largely uninformative web presentation were very uninformative and devoid of documentation . The closest the April announcement comes to Copyright Board reform is a vague reference to “less costly IP dispute resolution and copyright tariff setting at the Federal Court and Copyright Board of Canada.” That is a very thin basis for one of the two or three most drastic structural changes to the Copyright Board and its predecessor in the last 80+ years – all of which involved substantial standalone legislation and considerable scrutiny.

The Bill contains nearly 100 pages of dense, complicated and game changing IP legislation that will result in some significant structural change in several respects and may result in potentially controversial, costly and unintended consequences.  Ostensibly, this is about implementing this Government’s extremely vague IP strategy, and this is the pretext for including all of this in giant sized omnibus bill.

On the IP side, among other things, Bill C-86;

• Uses the heavy and not easily correctable hand of legislation on many issues when regulatory authority has been available for years, but the government didn’t act, for whatever reason
• Will establish a new and inevitably very expensive “college” of patent and trademark agents
• Will quite possibly slow down the work of the Copyright Board rather than expedite it and stops well short of establishing hard-wired deadlines to hold hearings or render decisions, which could have been decisively done by regulation long ago
• Introduces numerous complex and potentially controversial changes, such as patent “file wrapper estoppel” – an American concept that may help Canadian users/defendants in some cases but may backfire on innovator/patentees in others.

More specifically:

On copyright:

Bill C-86 contains provisions in ss. 243 – 246 of the bill that amend the Copyright Act “in order to specify that certain information is not permitted to be included within a notice under the notice and notice regime and to provide for a regulation-making power to prohibit further types of information from being included within such a notice.”  That’s OK  - but it is six years late and arguably unnecessary, since the authority to implement regulations prohibiting such abusive messaging is probably already sufficiently there in s. 41.25. This is better late than never, though we will never know how much money was unnecessarily paid by unsophisticated recipients who were naïve enough to unnecessarily respond to abusive notices and who needlessly put themselves on the radar of a troll after the in appropriate notices were passed along without apparent protest by risk averse and profit motivated ISPs

More complicated by far are the 20 pages of amendments from pages 216 -236 of the bill concerning the Copyright Board. The amendments purport to amend the Copyright Act:

in order to modernize the legislative framework relating to the

Copyright Board so as to improve the timeliness and clarity of its

proceedings and decision-making processes. More specifically, it

repeals spent provisions and

(a) codifies the Board’s mandate and establishes decision making

criteria;

(b) establishes new timelines in respect of Board matters, including

earlier filing dates for proposed tariffs and longer effective

periods for approved tariffs, and empowers the Governor

in Council to make additional timelines by regulation;

(c) formalizes case management of Board proceedings;

(d) reduces the number of matters that must be considered

by the Board;

(e) streamlines procedural steps across different tariff contexts,

maintaining differences between them only where necessary;

(f) amends relevant enforcement provisions, including the

availability of statutory damages for certain parties in respect

of Board-set royalty rates and enforcement of Board-set

terms and conditions; and

(g) modernizes existing language and structure for greater

clarity and consistency

That is reasonably accurate summary, as far as it goes, and is included in the bill. However, there are some detailed and new provisions that may have unintended consequences. In anything this complex, the devil is in the details – and there’s 20 pages of details.

Most of what needed to be done to the Copyright Board to speed things up and lower costs could have been and should have been done by regulation, since the authority for timelines, case management, etc. is already there. Here’s a copy of my submission to Industry Canada in 2017 incorporating my previous submission to the Senate BANC Committee, showing how most of the immediately pressing concerns can be dealt with by regulations.

There was a conference call on very short notice on November 1, 2018 with officials. A number of important questions were raised, such as the following:

• What is the purpose or need for the new s. 73.1 which imports language from the “mandatory” levy scheme in Part VIII of the act re enforcement of “terms and conditions”?
• Why will the 80+ year-old requirement of tariff filing and board hearings in the music sector – because it is such a powerful monopolist when operating collectively – be suddenly rendered obsolete? The Parker Commission recommended this in 1935, and the government of day approved it for reasons that are essentially just as valid today as they were more than 80 years ago.
• How can it help small businesses to potentially have to negotiate separately with SOCAN and RE:SOUND who have millions a year to spend on legal fees and other costs associated with collective administration and pushing revenues up?
• Has the permissive language of “may” referred to the in the SCC decision in CBC v. SODRAC in current s. 70.4 disappeared?
• Will the imposition of explicit criteria re “competitive market” and “public interest” cause more mischief, costs and need for protracted and expensive evidence from so-called experts? The Board has purported to be concerned with the public interest all along – so do we really need to etch this into stone, whatever it may mean? Even John Degen agreed with me that this was cause for concern – thought for difference reasons. But the fact that Mr. Degen and I agreed on something should tell you something.
• How will the great idea of cost recovery for public interest involvement is a great idea – but which I have not been able to find in the nearly 100 pages of IP legislation in Bill C-86 amount to anything other than an empty gesture? At the CRTC, cost recovery is provided for in legislation where appropriate.

The conference call Q&A was short, highly managed and scripted, and frankly not very satisfactory. While it was useful for those invited, it was no substitute for the normal committee hearing process which is the basis of good legislation.

Bill C-86 also contains other IP stuff – some of it potentially controversial, such as:

• Regulations on patent demand letters
• File wrapper estoppel, as noted above
• A “college” for patent and trademark agents that have great powers and potentially great complexity and operational costs and resembling a provincial law society
• Trademark “use” and inability of registered users to sue for three years unless they have actual “use’
• “Official marks” that makes only a tiny incremental step forward on a massive problem
• Awarding of costs in Trademark Opposition Board proceedings – but no details as to how or on what scale.

Again, there was a conference call on October 31, 2018 on very short notice. Questions were managed, truncated and/or ignored, perhaps but not clearly due to technical reasons. There was no discussion at all about the “College” – a potentially huge topic. There were mostly unsatisfactory answers to some good questions.

At least this is not stealth legislation, as we saw with Stephen Harper’s gratuitous windfall to the American recording industry in a budget bill on his way out the door in 2015. Or as we saw in the Liberal’s stealth attempt to prolong the copyright term in the name of Lucy Maude Montgomery in 2003 buried away in a “machinery of government” bill to merge the national library and archives.

True, there have been consultations on many though not all of the IP matters in Bill C-86. But this is no way to do IP legislation. The good intentions and hard work of the government and officials have led to a very dangerous procedural precedent because there will be no meaningful review of this work. Nearly 100 pages of dense legislation require parliamentary scrutiny – not a rubber stamp. Prior consultation is not and never will be an excuse to avoid parliamentary scrutiny.

This is a bad procedural precedent. Good intentions by ministers and officials are not necessarily sufficient for good legislation. Parliament is there for a reason. It should be allowed to do its job – without artificial shortcuts, and especially where there is no urgency to warrant any short cut. Good legislation requires good drafting – but also close scrutiny, testimony from interested parties, debate in committee and in the house and senate. Otherwise, what’s parliament for?

Bills and regulations require public comment and scrutiny. Errors and omissions can get corrected.  Even policy changes can be made, if warranted.  In the case of a free-standing bill with normal committee hearings and debate, there would also be a legislative history – which can be very important in subsequent litigation.

Prime Minister Trudeau made an important campaign promise about omnibus legislation. Hopefully, he will now ensure that the IP stuff is divided out of this Bill – or at least send it off to dedicated hearings at the INDU committee in the House and the BANC Committee in the Senate – and give these complicated provisions all the time they need for further consideration.

A token hearing by the Finance Committee, which has no experience or expertise in IP law, is no substitute for a normal hearing on a complicated IP bill.

The Ministers Letter to the INDU Committee

Here is a link to an undated  (presumably October 29, 2018 – the day of Bill C-86 first reading) letter from Ministers to the INDU Committee.

The letter has a heavy focus on the educational sector. Certain officials are widely believed to have been responsible for the ill-fated and temporarily derailed attempt to make Access Copyright tariffs effectively mandatory through the artifice of harmonizing statutory damage regimes to provide Access Copyright the same 3 -10 times statutory damage nuclear weapon available to SOCAN. This shameful attempt was heavily criticized by many, including Michael Geist and me. The rumoured legislation that would have done this failed to materialize in the spring. Nonetheless, the letter from the Ministers to the INDU Committee confirms that this very bad idea is very much alive and suggests that the certain bureaucrats apparently won’t let go of it.  The letter seems to unduly focus on educational issues, where there has clearly been intense lobbying and more than the usual litany of fake news about starving artists and who they are being failed by the allegedly inadequate copyright laws. The letter concludes as follows with an explicit invitation to the INDU Committee:

We are eager to receive the results of your work. We would appreciate any

recommendations the committees are able to offer on fairness and predictability in educational markets, including recommendations on the applicability and enforcement of Board-set rates.

(highlight added)

It looks like the confrontation over mandatory tariffs will be one of the main battle fronts in the s. 92 review. It will be fought not only in the Courts but also in Parliament. It seems that officials and Ministers and even parties who ought to know better  are either unable or unwilling to embrace the ruling of the Supreme Court of Canada in Canadian Broadcasting Corp. v. SODRAC 2003 Inc., [2015] 3 SCR 615, 2015 SCC 57 that tariffs set in the course of the so-called “arbitration” regime are not mandatory for users. This is a ruling resulting from arguments I made in the Supreme Court of Canada on behalf of Prof. Ariel Katz and the Centre for Intellectual Property Policy (“CIPP”) at McGill. If such tariffs are not mandatory even for users who voluntary submit to the Board’s so-called “arbitration” regime, how can tariffs be mandatory for those who are not party to any Board proceeding and wish to have no dealings with a collective because they can clear their copyright needs more efficiently in other ways? The issue is pending in the Federal Court of Appeal – and will likely end up in the Supreme Court of Canada.

With all of the above, and the Government’s extremely costly capitulation to Trump on the life + 70-year copyright term in the USMCA, which this Government is proclaiming as a victory, Canadian copyright is in great turmoil.

The one thing that should be obvious at this point is that an omnibus bill is not the way to proceed to fix Canada’s IP laws and lead to innovation for the nation.

Oone of my best law school professors, the wonderful Harry Glasbeek, said that anytime there’s a new Supreme Court of Canada decision or new legislation, think of the worst possible unintended consequence – and rest assured that it will indeed come to pass and sooner rather than later. Another cliché comes to mind, namely that “if it ain’t broke, don’t fix it.”

If I sound like a crusty old curmudgeon here, that may be because that’s what I may well be. It displeases me that decisions and actions are being taken on major IP issues by officials who may, in some cases, have little actual corporate memory and virtually no real IP expertise, which is somewhat understandable the way the bureaucracy works and people come and go. That is why we have Parliament to study and enact, if so inclined and after adequate study and debate, the legislation devised and drafted by officials.

There will presumably be some discussion in the Finance Committee of the House of Commons of the “subject matter” of Bill C-86 beginning tomorrow.  IPIC and Michael Geist will have a few minutes on November 7, 2018.

HPK

PS - It seems that Speaker Geoff Regan  has concerns about this process and has already begun to divide the bill upon the request of Peter Julian MP according to this report from the Globe and Mail.