The Copyright Board Game

The Canadian Bar Association “IP Day” – May 30, 2019

At the Canadian Bar Association’s perennial “IP day” on May 30, 2019, there was a first ever “town hall” session on the Copyright Board (the “Board”). This was promising and could have been a very useful event for the copyright bar and the Board itself.  Unfortunately, it turned out to be 90 minutes of mostly vague comments from the Board’s Vice Chair and CEO Nathalie Théberge with a few additional comments from the Board’s General Counsel Sylvain Audet. Since nothing was said about Chatham House rules concerning this event, I will make some limited but frank comments about the session.

Spoiler alert: Although Mme Théberge did at least acknowledge the delay issue at the outset, neither she nor Maître Audet indicated any direct and specific steps that the Board is going to take to deal with the issue of lengthy delays.  The Q & A aspect of the session was also disappointing.

The Board’s Chairman, Justice Robert Blair, was scheduled to speak but was reportedly unable to get to Ottawa due to weather conditions in Toronto that morning. Ms. Théberge, appointed about nine months ago, instead presented the remarks that Justice Blair would presumably otherwise have done plus her own. Mme Théberge, an experienced senior bureaucrat, is the first vice-chair and CEO of the Board in its thirty-year history who has not been a lawyer or had a law degree. The moderator was John Cotter, who acts both for “users” entities, namely Universities Canada and York University and Re:Sound, which is Canada’s second largest music collective in terms of revenue.

It was unfortunate that the promise of meeting Justice Blair did not materialize. Since his appointment as the Board’s Chair four years ago, which was seen as very promising by myself and others, there has been very limited opportunity to hear or read about his views on Board reform. There is one posting of some interesting remarks on his part on the occasion of an Ontario Bar Association event on May 1, 2018. More on that below. His appointment will expire on May 27, 2020, unless renewed. It would be helpful if the remarks he intended to give on May 30, 2019 were published online, as were his remarks from 2018 - since it was not clear where his points stopped and Ms. Théberge’s points began.

Ms.  Théberge spoke of changes brought about by Bill C-86 and spent considerable time indicating how time would be now be saved along with some resources by virtue of there no longer being a requirement to publish tariffs in the Canada Gazette. It’s not clear how this would save much more than a couple of months more or less at the most, and the Canada Gazette requirement has been on the books virtually forever.  Two months is the blink of an eye in the context of contested Board hearings that typically take seven years or more to fruition – and that’s before the almost inevitable judicial review which frequently results in course correction. The current proposed Access Copyright Post Secondary tariff, which has been ongoing for NINE years now and is effectively unopposed, has no end in sight – but who is counting?

Ms.  Théberge spent a lot of time pointing out that, as of April 1, 2019 the new “public interest” requirement for tariffs came into effect. Here is the provision:

Fair and equitable

66.501 The Board shall fix royalty and levy rates and any related terms and conditions under this Act that are fair and equitable, in consideration of

(a) what would have been agreed upon between a willing buyer and a willing seller acting in a competitive market with all relevant information, at arm’s length and free of external constraints;

(b) the public interest;

(c) any regulation made under subsection 66.91(1); and

(d) any other criterion that the Board considers appropriate.

2018, c. 27, s. 292 (highlight added)

This was introduced in the very unfortunate Bill C-86 omnibus bill that received only a token amount of debate and public comment. I said at the time in a blog that was very critical of the Governments use of omnibus legislation in this way that:

·       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.

Neither of these concepts – the “public interest” and “competitive market” –  are new. They are embedded in existing jurisprudence, especially that of the “public interest”. That the Board should now consider that it suddenly has an obligation to decide cases “in the public interest” is astonishing. What else has it and its predecessor been doing for more than 80 years? Is the Board unaware of Supreme Court of Canada jurisprudence going back almost 8 decades? While some consultants are doubtless salivating at the prospect of providing lucrative so-called “expert” evidence on these issues that will result in protracted and much more expensive hearings, this should not be necessary if the Board simply follows longstanding case law and takes responsibility for deciding the ultimate legal questions itself rather than relying upon so-called experts, who are often repeat performers and rarely truly independent when it comes to Copyright Board proceedings.

Indeed, Justice Blair himself made a half dozen references to the “public interest” in his published remarks from over a year ago. Why this is suddenly now an apparent new mandate for the Board is astonishing and should be very puzzling to those who know Canadian copyright jurisprudence.

However, suppose that Bill C-86 actually did somehow enact something new (likely unlikely) in this respect and could be invoked to call for a new approach. It would be nice if this supposedly new “public interest” provision would be invoked to enable the Board to retain truly neutral and credible advice in the person of amicus curiae or “assessors” in appropriate circumstances but there was no suggestion to that effect. Moreover, when the Board is indecisive even about deciding such a basic issues as whether a person engaged in case management should be on the presiding panel (which should be avoided at all costs, as is the case in the Federal Court as every experienced Federal Court lawyer knows well), it’s hard to imagine how the Board would be thinking about bringing in the concept of amicus curiae or “assessors” – which would be admittedly unusual but arguably within the realm of the possible and advisable. Besides, if the thought were ever to occur to the Board, it would no doubt want a very large budget increase to look into this and to fund such activity. Anyway, it’s probably a non-starter of a suggestion, since there are very few if any people in Canada who are sufficiently expert lawyers or economists to fulfill this role and who would not already have too much baggage to carry and still be perceived as credible to all concerned.

So, I expect that my fear – shared by others – that this gratuitous statutory  references to the “public interest” and a “competitive market” will become an excuse for even longer delays appears to be coming true. I hope that I am wrong. However, given the Board’s propensity for making very simple things very complicated (e.g. “ordinarily used”, “making available”, etc.), I cannot be optimistic.

There were very few other specifics provided about how thing will get speeded up, other than vague references to more practice notices,  case management, a “handbook”, etc. Mme Théberge mentioned three recent Board practice notices implanted since her appointment that “deal with: (1) electronic files submitted to the Copyright Board; (2) sworn statements by fact witnesses in oral hearings; and (3) acknowledgement of expert witnesses.” These are frankly unremarkable and were hardly worthy of mention. Thankfully, she did not dwell on them.

Interestingly, there were several references to implementing a Board Twitter account, with a caveat that this is difficult to do. Why this would be difficult to do, why it would require any resources, or what it would accomplish were not explained. If the purpose is to notify the world of new developments, the Board could provide a notification by email option on its website – as do the Federal Courts and the Supreme Court of Canada and even my own very humble blog that uses an ancient zero-cost template. This would be far more effective than Twitter in reaching interested “affected persons”, something that the Board briefly recently seemed interested in doing but quickly resiled from when it heard things it didn’t want to hear. Anyway, there’s no harm in having a Twitter account but why it is difficult to do and why it would take up any resources is a total mystery. The Supreme Court of Canada @SCC_eng, the Federal Court of Appeal @FedCourtApp_en  and the Federal Court @FedCourt_CAN_en have long had Twitter accounts – with little discernable impact one way or another. All three of these institutions, however, do provide for automated direct email notifications regarding important developments – something that I do receive from the Board but probably only because I have long been on their counsel mailing list. This does not seem to be available to the world at large on its website, as it the case with the aforementioned courts where it is simple for anyone to receive automatic email updates of important decisions and bulletins.

The Board will be apparently be using its newly found extra $1,000,000 a year to, among other things, get a new website. Unless it is going to be as useful as that the of the Competition Tribunal  (which last time I looked had a much smaller budget that the Board and that was before the Board’s recent million dollar a year additional funding) in providing access to documents – which is extremely unlikely given the Board’s routine on demand over-classification of just about anything as confidential - it is unclear how this will help in any way. The Board already posts its procedural rulings and its very few substantive decisions (usually only two or three at most per year)  and actual tariffs (fewer than five a year, notwithstanding Prof. de Beer’s very problematic methodology that suggests a multiple of this number) quite adequately on its current website, for which it already spends sometimes tens of thousands a year for third party for maintenance.

The Board is not apparently very busy. It has held no oral hearings in more than two years and none are scheduled until March of 2020.

The Q & A:

The moderator had solicited some questions ahead of time, which were apparently provided to the Board in advance, which might strike many as at best a gratuitous gesture.

Only one of these questions, as I recall, was mildly interesting – which concerned how and by whom the Board’s decisions get written. The answer was to the effect that it was not relevant who sits behind the computer because the members are responsible for their decisions.  But, of course it matters and is relevant: he/she who hears must decide. That’s very basic. It is not as if there are a very large number of cases at the Board, as is the case at the Federal Court, where judges have only one clerk each and are expected to write about one substantive judgment a month and deal constantly with very many procedural and immigration files requiring written orders. The immigration files are of utmost personal importance to those affected. It is seriously concerning if the members of a presumedly expert quasi-judicial tribunal which usually issues only two or three substantive decisions a year at the most do not actually write, or at least actively participate in writing their own decisions. Decision writing is not something that can be delegated.

I tried to ask a question premised on the findings of the SCC in the 1954 Maple Leaf and the 2015 CBC v. SODRAC (in which I was very involved) cases as to why tariffs are so retroactive and why there is a “culture of delay” at the Board and why tariffs now regularly take seven years to reach fruition. Ms. Theberge started to answer the question by asking whether I was making a comment, which of course I was as a preface to my question and which is perfectly normal. But Mr. Cotter then proceeded to use his moderator prerogative to cut me off, even though he allowed follow up questions to several non-memorable questions that he had earlier recognized.  Provocative questions from the floor were clearly not welcome by Mr. Cotter.

Interestingly, although there was at least one prominent lawyer present who represents major users in the broadcast distribution sector, there were no questions that I can recall coming from that direction and no probing “user” questions, other than mine which was cut off.

Some Opinions, Facts, and Conclusion

In my opinion, there is what can fairly be described as a chronic culture of delay at the Board that is unique by Canadian standards. I am neither alone nor outspoken in this respect. In 2016, the Senate BANC Committee Report concluded:

The Copyright Board of Canada plays a pivotal role in Canada’s cultural sector. Yet, from what the committee heard, the Board is dated, dysfunctional and in dire need of reform. Whether the reasons are statutory, structural or otherwise, the Board did not – or could not – provide the committee with solutions to the problems that were identified by witnesses. The concerns outlined in this report require further investigation and timely action.

(highlight added)

This has led to a persistent pattern of hearings that often take more than four years to happen, decisions that take three more years to render, and tariffs that are consequently retroactive for several years. Then, there is the almost inevitable and often successful judicial review. This inexplicable, inexcusable and unique pattern exists notwithstanding explicit Supreme Court of Canada jurisprudence going back to 1954 that says that his shouldn’t be happening. On the issue of retroactivity caused by delay, I have previously pointed to:

“….the potential invalidity of retroactive tariffs in light of the venerable 1954  Maple Leaf Broadcasting v. Composers, Authors and Publishers Association of Canada Ltd., [1954] SCR 624 (“Maple Leaf”) decision from the Supreme Court of Canada (“SCC”). That decision was concerned with a tariff on radio stations that was retroactive by less than three months and the SCC – with some rather explicit reluctance – permitted it as a “practical necessity” but stated clearly that it was the "implied duty" of the Board to proceed with "all possible expedition" in cases where tariffs may have a retroactive effect. In the recent CBC v. SODRAC 2015 SCC 57 case in the SCC, I cited this same Maple Leaf case in the factum prepared along with Prof. Ariel Katz and Prof. David Lametti (as he then was). There was considerable interest during the oral argument in the retroactivity issue and the SCC commented on it very explicitly in this unusual footnote – which may be seen as a warning signal to collectives and an invitation to users seeking judicial review of retroactive tariffs:

[2] During the hearing before this Court, counsel for the interveners the Centre for Intellectual Property Policy and Ariel Katz briefly raised concerns regarding the Board’s power to issue retroactively binding decisions in general. That issue was not squarely before this Court in this case, and I do not purport to decide broader questions concerning the legitimacy of or limits on the Board’s power to issue retroactive decisions here.”

The Copyright Board Game Aspect

If Copyright Board proceedings were a “board game” (forgive the pun), the main rules would be very simple:

·       The applicant collective who starts the game has a huge advantage.  Very few tariffs have ever been rejected and the cost of obtaining a tariff almost always is much less than the tariff will pay. The costs of the proceedings are paid for by each and every one of the members of the collective, most of whom will see far less per year in royalties than the most junior lawyer working on the case will be billing per hour.

·       A “user” opponent must be prepared to fight for years; however, there is little incentive for user associations or their counsel to play hardball or shorten the proceedings if the cost of the tariff can be passed on to the ultimate Canadian consumers, who are virtually helpless in this context.

·       The executives of the collectives, the lawyers on both sides of these absurdly protracted hearings, and the members and staff of the ever-expanding Board are all almost invariably the prize winners in this game. The losers are Canadian consumers who don’t get any meaningful chance to participate in this very high stakes and well-hidden Board game but who end up paying the prize winners.

Given largely ineffective challenges to date both at the Board and in the Courts (hopefully this will change someday though not clearly soon enough), there is an assumption – however incorrect – that Board tariffs can be both significantly retroactive and mandatory. Hopefully, the impact of the Supreme Court’s landmark 2015 decision in Canadian Broadcasting Corp. v. SODRAC 2003 Inc., [2015] 3 SCR 615, 2015 SCC 57 (CanLII) will finally sink in on both issues. In that case, I together with Prof. Ariel Katz and Prof. David Lametti (as he then was) were able to get a very clear ruling on how tariffs are not mandatory and a very bright warning light about retroactive tariffs. Unfortunately, the implications have not been clearly reflected in positions taken in some of the important litigation since then, such as that of Access Copyright v. York University.

Another Parker Commission?

As I’ve said before along with those who I often disagree with, the time has come for the Government to consider another Parker Commission.  It is imperative that such a commission be led by a retired Federal Court, Federal Court of Appeal or Supreme Court of Canada judge with proven expertise and impeccable independence. There are several such people out there, if any of them are willing to serve. The other commissioners and staff must reflect adequate balance, expertise and total independence. This won’t be easy – but I see no other solution. The composition, structure and mandate of such a commission must be done carefully and properly. Recent history has sadly shown the consequences what can go wrong with commissions when this is not done right.

I don’t think that it’s sustainable to wait another four years or more to see how the current initiatives play out. The current efforts at Board reform are too little, too late, and are clearly off to a bad start, if not a serious setback. Bill C-86 will, if anything, make things even worse – at least as the Board seems to interpret it.   The recently proposed regulations on the timing of Board decisions are at best a total waste of time and, at worst, a normalization of inexplicable, unacceptable and unique delay.

If I seem petulant, patronizing, pontificating and/or perturbed about this situation, it’s because I care about it deeply and have been involved one way or another for nearly four decades. I’ve seen things go, essentially, from good until 1988 (up until when Canada was viewed internationally as exemplary in the field of collective oversight) and then from bad to worse. For example, the previous Chair, Justice Vancise, announced with great fanfare shortly after his appointment that he would reduce the pendency of board decisions from what was then about 18 months down to six months, like the Supreme Court of Canada. Of course, that 2006 promise was an inapt comparison to the SCC in countless ways. And, in the result, the pendency only got worse under his watch. He even held onto some of his own files for a long time after he retired – indeed almost four years . Nelson Landry, who had a career mainly as patent lawyer, with dozens of reported patent cases, and a few trademarks, copyright and industrial design reported cases, retired from the Board on February 10, 2018.  He is still seized of the following outstanding files:

-      Access Copyright – Post-Secondary Educational Institutions Tariff (2011-2013 and 2014-2017)

-      Television Retransmission (2014-2018)

-      SOCAN-Re: Sound - Pay Audio Services Tariffs, 2007-2016

-      SODRAC v. CBC Licences [Redetermination (2008-2012); Determination (2012-2018); Interactive kiosks (2011)]

This practice of retired members being seized of and working on files for many years after so-called retirement is unusual, if not unique. Supreme Court of Canada judges are required to finish off their work within six months and Federal Courts judges get only eight weeks. At the very least, the mechanism and rates of remuneration of retired Board members for the work they do on files of which they are seized should be disclosed. Judicial salaries and salaries of active board members (within a range) are public information. There is no reason why an indefinite period of presumably paid involvement by supposedly retired Board members is necessary and this practice needs to be eliminated. In the meantime, full transparency is required on this issue.

Frankly, the current departmental bureaucracy, or at least some key players at the senior decision-making management level, may not be adequately equipped in terms of knowledge, expertise, experience, and corporate memory to deal with the issues involving reform of the Board. Moreover, the Board itself has not shown the willingness to self-reform. Two academic consultants who have been paid by the Government, namely Professors Paul Daly and Jeremy de Beer (who has also been a paid consultant to the Board),  have offered little insight into concrete problem solving solutions in my opinion. Unsurprisingly, both have suggested that more research is needed. There has been a new Chair in place for four years and new membership and a new Vice-Chair and CEO in place now for almost a year – with no concrete signs of progress.

Since the overall process of copyright law revision and the “S. 92” review appears to be headed in the direction of inevitable prolonged internecine struggle as aided and abetted by extraordinarily aggressive and expensive lobbying (i.e. history repeating itself), the one clearly fixable problem is that the Copyright Board – where history is again instructive with Justice Parker’s report.

HPK