The Copyright
Board of Canada is preparing to celebrate its 30th anniversary with an
invitation only event on October 24, 2019 at the National Arts Centre
in Ottawa. So, it’s timely to reflect on some of its more notable aspects.
It deserves to be
congratulated in many respects but needs to reminded that, only three years ago, it
was described as “dated, dysfunctional and in dire need of reform” by the Senate BANC
Committee. There has been virtually no tangible reform since then - or even any meaningful proposals in that direction - either from the Government or the Board itself.
The Copyright Board came into existence on February 1,
1989 upon proclamation ofsections 12 to 15, 17, 20 and 25 of the Act to amend
the Copyright Act (Chapter 15 of the Statutes of Canada, 1988) assented to on
June 8, 1988. It replaced the Copyright Appeal Board which, since
1936, was responsible for the annual review and approval of royalties payable
to the performing rights societies for the performance of musical works in
Canada.
This current Copyright
Board “2.0” is the 1989 replacement for Canada’s then 53-year-old internationally
admired and exemplary Copyright Appeal Board “1.0”, which was established in 1936 as a result of the legendary 1935 report of the Parker Commission.
The Copyright Appeal Board consisted of a judge and two public servants, all of
whom served part time. The secretariat services were provided on a part time
basis by an employee in the predecessor of today’s Canadian Intellectual
Property Office (“CIPO”). The Copyright Appeal Board had a mandate restricted
to music performing rights societies – which then meant the two predecessors of
SOCAN (which is itself the result of a merger that was permitted at about the
same time as the new Board was created) and following the landmark 1988
revision of the Copyright Act. So, Canada has had a copyright tribunal in one
form or another for 83 years now. For those who want to dig deeper into the
Board’s history – which is not yet adequately documented – there’s an interesting and useful Master’s Thesis from 2016 by Louis J. D’Alton available online.
I’ve known both institutions
and most of their key personnel until recently and have had some considerable involvement
with the Copyright Board on the blank media tariff and some other matters. I’ve
also been involved in successful judicial review both supporting and opposing some
the Board’s key decisions
Any public
criticism I’ve had of the Board has been in the spirit of “tough love” for an
institution that has played and must somehow continue play an essential role in
Canada’s economic and cultural development for eight decades. If it didn’t exist, we would probably need to
invent it. But, maybe it’s time now for Ver. 2.0 to be reinvented as Version
3.0.
In any event, my
criticisms are essentially very simple and has been shared by many other
stakeholders and counsel, including those in the music industry, who have an
interest in the Board. The main, obvious and inescapable criticism is that it
takes far too long for tariffs to be decided and they are thus usually very retroactive.
Before I go on, I
want to make one thing very clear. The Board’s administrative staff have always
exemplified the best characteristics of the Canadian public service. Claude
Majeau and his successor, Gilles McDougall, in the role of Secretary-General
have been extremely courteous, professional, knowledgeable, impartial, and
accessible in an exemplary way. Likewise, those in the Registry who keep track
of a large amount of documents have always been very helpful and extremely
competent.
-
contested tariffs often take
about four years or more to get to the hearing stage and about three years thereafter
for a decision to be rendered;
-
The Board only renders at
most two or three substantive decisions a year;
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At the time I commented in
2015 on Prof. de Beer’s study, the Board
had only produced about 74 actual tariffs in its 30-year history, as measured
by its own taxonomy and methodology utilized prior that study in which Prof. de
Beer suggested the astonishing grand total of 852 tariffs (when each tariff is
subdivided and counted year by year). I commented
at the time on the tally of 74 tariffs that “Even this is an inflated number
and reflects a number of minor “redeterminations” and other less than
significant events. But it is still the Board’s own number, as calculated from
the Board’s own posted information. Still, this is less than 10% of Prof. de
Beer’s number of 852.”;
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Most of these tariffs are
significantly retroactive for the simple reason that it took typically several
years to decide them;
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A great many of the
tariffs as counted by Prof. de Beer were unopposed – but still languished for a
long time prior to being certified;
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The Board has been sitting
on the extraordinarily important Access Copyright proposed post-secondary
tariff for more than nine years now.
For all practical purposes, it has been unopposed since
April 24, 2012; and,
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Even nine years and
counting is not as long as a previous Access Copyright tariff took to decide.
The Provincial & Territorial Government tariff was 11 years in
the making and fully retroactive –
though the very small amount awarded in the end was probably sufficiently good
news that the Governments involved were not concerned about the retroactivity
in that case. In fairness to the Board, part of this delay was due to the
detour through the Federal Court of Appeal on the issue of crown immunity. However,
as to that detour, see below concerning “Reference” procedure.
Why “Dysfunctional”?
A large cause of
the problem with the Board’s “culture of delay” may stem from the excessive
expectations placed upon it by successive governments. The Mulroney government
implemented the recommendations of the heavily manipulated 1985 “Charter of Rights
for Creators” Parliamentary Committee report in the 1988 overhaul of the Copyright Act. Those recommendations
called for essentially unlimited expansion of collective activity in Canada,
and the creation of a very much expanded version of the former Copyright Appeal
Board, which had served Canada well and been the source of international
admiration for the previous five decades at the time. The modern structure of
the Board and the expectation that collective administration of copyright would
serve the cultural community and take pressure off taxpayers was the result of
this report. So too was the creation of an ever-expanding bureaucracy to
support the Copyright Board 2.0.
It may well be
that the great weight of these expectations is a significant contributing
factor to the Board’s ever-increasing tendency to imbue what could have and
should have been a relatively simple number crunching rate calculation exercise with layers of complexity and
reflection that take years instead of weeks or months at the most to resolve. In the past, many have observed anecdotally
and cynically that even after many years of deliberation and millions of
dollars in legal and expert fees often expended, the tariff at the end of the
day has often the simple arithmetical average of the amounts proposed by the
proponent and opponent(s) +/– a few percent.
However, that pattern,
if it was ever true, has been changing and the Board has issued some surprising and
encouraging decision. in recent years
The Board has refused
to set even a nominal tariff for SOCAN where there was insufficient evidence and
was vindicated in the 2010 Federal Court decision in the case of SOCAN
v Bell. I was pleased to argue successfully in favour of upholding the
Board in that litigation.
More recently, The
Board has sometimes certified tariffs at a surprisingly low rate that probably doesn’t
even generate enough revenue to cover the costs of the proceedings, for example
in 2015 in the case of the Access Copyright provincial tariff.
In this tariff, as I pointed out at the time:
…the Board
awarded a tariff of 11.56 ¢ per FTE (full time equivalent) for the period
2005-2009 and 49.71 ¢ per FTE for 2010-2014. That’s less than 1% and about 2%
respectively of what AC asked for. According to the Board, the tariff
will generate a total of only about $370,000 over its ten year period – which
is likely only a small fraction of the costs involved in obtaining the tariff.
The Board’s
decision also contained ample good reasoning about fair dealing and other
excellent aspects that I commented upon. As devastating as that decision must have been
to Access Copyright, no judicial review was undertaken, and the Board’s
decision is thus vindicated.
So, no good deed
goes unpunished, it seems, in the copyright world in Canada. The Board took
this in stride, although retired Chair William Vancise did remark upon it later as
the recently retired Chair at an important ALAI event in Ottawa:
Let me say that I found
it completely unacceptable and totally inappropriate for such an association to
lobby the Chairman of the Board, an independent quasi-judicial tribunal—and I
am certainly not alone in this view. It showed a lack of respect for the
institution. The proper forum for dealing with a decision that Music Canada’s
clients don’t like is to take it to
judicial review
The Court concluded
with some unusual language that can be seen as praiseworthy of the Copyright
Board:
[100] To reiterate, overall the Board was entitled to a
broad margin of appreciation
in considering the complex and specialized issues in this case. The applicant
has not persuaded me that the Board’s decision was outside of that margin of appreciation.
(highlight added)
The Federal Court
of Appeal is usually very deliberate in its wording – especially Justice
Stratas who wrote this decision. It is probably not a stretch to particularly
note and appreciate his choice of the word “appreciation”.
Other Countries
As I’ve pointed
out often before, no other comparable country has such a complex collective copyright
administration apparatus in place. Canada has about six times as many
collectives as the USA, where Congress has bitten the bullet on such major
issues as retransmission and spelled out the rates, leaving much less policy responsibility
to the U.S. Copyright Royalty Tribunal – which is required by law to get its
job done within 11 months – not an indeterminate number of years. Moreover, in
the USA, the role of antitrust law has always been important as a check and
balance on the major performing rights organizations, which operate under
consent decrees that have long and elaborate provenance. In Canada, the Competition
Bureau has never been anything but absent when it comes to copyright
collectives at the Copyright Board. To the best of my knowledge, the Bureau has
never once exercised any of the powers given to it under the Copyright Act in this respect. That of course
is not a fault of the Board or Parliament.
Mission Creep?
Apparently in the
spirit of the large mission mandate that the Board presumably assumed it was
given, the Board attempted almost 20 years ago to create and promote “the
formation of the International Association of Copyright Administrative
Institutions (IACAI)”. Canada would have
presumably hosted a new organization of presumably like-minded copyright
institutions from around the world. Despite a lavish conference at the Chateau
Laurier, there was virtually no interest outside of Canada – probably because
no other country has anything comparable in size, scope, mandate or resources
comparable to Canada’s Copyright Board. There were, apparently, no like-minded
countries. Here are some links to the few surviving references to this effort,
which was led by the now long-retired Vice Chair of the Board, Stephen Callary:
IACAIhttps://cb-cda.gc.ca/about-apropos/annual-annuel/2002-2003-e.pdfhttps://cb-cda.gc.ca/about-apropos/annual-annuel/2003-2004-e.pdfArchive:https://web.archive.org/web/20040727085214/http://www.iacai.org/https://web.archive.org/web/20050123075130/http://iacai.org/
Other Mission Creep?
The Board has
sometimes tended to make very simple things very complicated. This was the case
for a long time with the Unlocatable Copyright Owner regime. The Board now
deals with only a handful of these files every year. That
is likely because the public and the legal profession now has more awareness of
and confidence in the fair dealing and other exceptions in the Act, the $5,000 cap
on damages for non-commercial infringement and – presumably – due to more
sophistication at the Board itself.
However, it was
not so long ago in 2014 that Barry Sookman proudly took it upon himself to speak in praise of
this unlocatable owner activity at the Fordham Conference,
with former Chairman William Vancise and I crossing swords afterwards from the
audience. The Board had commissioned a study by Prof. Jeremy de Beer and former Board counsel Mario
Bouchard to look at this activity – which at one point required
one full time person to support it. There was even unofficial and absurd talk about
using these provisions to deal with the Google Books issue in Canada. Anyway,
Chairman Vancise, as I have pointed out, deserves credit for eliminating the
long-standing practice of the Board for requiring payments for copies of architectural
plans from city halls from home owners doing renovations, which I had long
argued was totally unnecessary in view of clear Supreme Court of Canada
jurisprudence. It is not known how much resources are currently spent on this
“unlocatable” activity. Hopefully, no more than few hours a year.
A current example
of potentially problematic “mission creep” is the Board’s new preoccupation
with the concepts of “public interest” and
“competitive market”. As I’ve pointed out before, despite the recent codification
of these concepts in the statute, neither of these concepts 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.
Budget Increase
The Board has
recently been given a $1,000,000 annual budget increase by the Government. The Board
already had a budget of about $3.5 million a year, compared to $3.2 million
p.a. for the Competition Tribunal (based upon 2015 figures). Why it needs this
budget increase is totally unclear and it may actually slow things down as the
Board struggles to figure out what to do with this money. It must always be
recalled that they who hear must decide – so that last thing that the Board
needs is more lawyers and economists doing background research. The parties to
the hearings usually provide ample legal and economic research. It is for the
members – who are presumed to have expertise – to decide and write decisions.
That is how normal courts work – and even Supreme Court of Canada judges have
only three clerks.
The Board
regularly spends a lot of money on third party contracts, for some rather
surprising things, such as media monitoring and website updating – which one
would think could easily be done in house. See this batch of contracts, for example
– which includes $45,200 for
clippings and report services, $152,829 in 2017 for Professional service for the amendment of the Copyright Act, $15,000 for outside
counsel to advise on ATIP requests. The Board has 18 full time employees to
support its members, including five full time lawyers plus an articling student
and some three economists – though the Board has recently apparently decided to remove its list of its helpful staff
other than its new Secretary General from its website. Nonetheless, resourceful
people who know their way around the Government’s websites can find this
information elsewhere.
The contract disclosure
information sometimes includes interesting items that invite curiousity. For
example, the large expenditure of $152,829
for
“Professional service for the
amendment of the Copyright Act”
from a company called Leverage Technologie Resources Inc. in 2017 is interesting.
The latest disclosure indicates an expenditure
of $187,746 for the maintenance and updates of the Copyright
Board's website for the period 2019-04-05 to 2020-03-31.
The cost of the
Board’s decisions should be considered. Even if the Board renders three
significant substantive decisions per years – which it has not done for a long
time – the cost per decision is going to be about at least about $1.5 million. By
comparison, the Supreme Court of Canada typically renders 70 or more actual
judgments – most with lengthy reasons - per year and considers hundreds of
leave applications. Its most operating budget was about $43 million. That’s a cost per actual judgment of about $600,000
– and the judgments are usually reliably rendered within six months or so of a
hearing. And that doesn’t count the hundreds of leave applications.
Use of reference procedure
These provisions provide
that the Board “may at any stage
of its proceedings refer any question or issue of law, of jurisdiction or of
practice and procedure to the Federal Court for hearing and determination”.
The Board could
and arguably have used this procedure to save time and get to the inevitable
result regarding such issues as crown immunity, the extension of the private
copyright levy to devices, the making available right, and last – but not least –
the “mandatory tariff” issue.
Since issues such
as these are almost certain to find their way upstairs anyway, why spend years
and lots of resources to achieve what is likely only going to be a preliminary
opinion from a Board constituted to determine such quintessentially judicial
issues? Many years of time
and many millions of dollars might be saved by using this avenue. No new
legislation or regulations are needed. It has been on the books for years.
Presumed Expertise
Speaking of
expertise, as we respectfully, albeit impatiently, wait the judgment of the
Supreme Court of Canada in the trilogy of cases involving standard of review,
one cannot help but wonder whether the existential question of whether
deference should be accorded to administrative tribunals premised on their presumed
expertise will be addressed. In the case of the Copyright Board, it must be
frankly stated and recognized that many of its members over the years have not hit
the ground running in terms of actual independent and credible expertise in
terms of copyright law, experience, or relevant professional knowledge of
economics. Some Board members have, to their credit, worked hard to develop
such expertise after they were appointed.
One notable exception
in terms of both expertise and independence at the outset was the first full time Vice Chairman of the
Copyright Board, the long since retired Michel Hétu who previously had a
distinguished career in the Department of Justice and experience with
the Copyright Appeal Board. He knew a lot about copyright law and policy.
Likewise, when Claude Majeau, also a lawyer, was elevated from being Secretary
General to Vice Chairman, he had acquired considerable relevant expertise from
his long and able service as Secretary General.
This expertise
issue is an admittedly difficult problem to solve. There aren’t a lot of people
in Canada with a lot of suitable expertise or experience in copyright law and
collective administration to begin with – and virtually all of them with such background
are rightfully or otherwise regarded as less than independent in their views
due to their backgrounds. One possible step to solve this problem would be the
appointment of members with normally opposing viewpoints to counterbalance each
other. However, that option would also be fraught with problems, such as requests
for recusal, whether or not justified.
We have yet to see
the appointment of a chair, who must be either a sitting or retired judge of a
superior court, who comes already equipped with copyright expertise. Even the current
Chair, a highly respected judge from the Ontario Court of Appeal who has apparently
remained notably reticent about Board reform since his appointment four years
ago, has actually explicitly suggested that the chair should ideally come from
the Federal Courts, where some judges have actually had or acquired some copyright
experience. He has also alluded more generally to the expertise issue In his only publicly posted remarks to date, when
in a May 1, 2018 presentation he said:
I think it is also
important to keep in mind that, while the Board’s staff, and at least the
current Vice-Chair, are the repositories of a great deal of expertise in the
rate-setting process, all members of the tribunal at the hearing may not have
that same in-depth knowledge. The Chair must be a sitting or retired superior court judge (where very
little intellectual property work, much less copyright work, is done), and to
date has not come from the Federal Court system where they actually know
something about those subjects! In addition, none of the present members
is an economist. In this sense, the old adage that applies to every good
counsel, in any setting, is relevant: know your adjudicator and your forum.
Of course, not all
Federal Court judges are experts on copyright law. Moreover, some, who are more
knowledge than others, have retired and may not be interested in the kind of challenges
that this job would have entailed in recent times which may have seemed less
jurisprudential and more administrative, bureaucratic and even political.
Another aspect of
expertise that must be kept in mind is that knowledge in one field of IP law
does not necessary carry over to another. A great basketball player won’t be a
good hockey player if they haven’t learned how to skate.
Looking Forward?
I’ve also noted that this is the
first time in the Board’s history that neither the Vice Chair nor the
Secretary-General have any formal legal training. Nor is there much corporate
memory or experience at the senior ranks of the departmental bureaucracy to
deal with this situation.
I think that the
ultimate solution to the problems with the Board will require that it be
reinvented. This may include curtailing its mandate, budget, and staff to perform
only very basic and circumscribed rate calculation, according to a fixed
schedule along the lines of the US Copyright Royalty Tribunal. More complicated
questions involving law, terms and conditions of tariffs, liability, etc.
should be handed over to the Competition Tribunal or, perhaps, one or two
designated judges in the Federal Court – something along the lines of the
consent decree mechanism in the United States. None of this is going to happen
overnight, nor should it. Maybe there’s an even better vision.
At the end of the
day, it’s not clear how the current system does much to serve actual creators.
Most individual members of collectives such as Access Copyright and SOCAN earn far
less in a year from tariff royalties than the junior lawyers who work for their
collective earn in an hour. Only a handful of “star” creators see serious money
as a result of the Copyright Board’s tariff system. That’s the elephant in the room that needs to
be addressed. Sadly, there is little or no incentive for collectives or their law
firms who know how the system works to change this system. Even worse, there is no incentive for the
major “objector” entities, at least the ones that can pass costs along to
users, or the law firms that represent them, to fix the system. Consumers,
students, taxpayers and other completely helpless Canadians pay for this inefficiency.
The Copyright Board has evolved by and
large not only to tolerate this system but generally to enable and encourage
it. The Board has virtually ignored any
issues regarding the internal efficiency, governance or adequacy of
distributions to individual creators.
What we need is
another Parker Commission 2.0 to kickstart a new Copyright Board 3.0. There are
retired judges from the Federal Courts and the Supreme Court of Canada with the
insight and experience who could lead such an effort. Maybe what we need is an even grander new
Massey Commission to explore how Canada deals with its culture, communications,
innovation, etc. issues from a holistic economic, legal and evidence-based
approach. But that is perhaps too big a vision. Let’s start now with a Parker
Commission 2.0 that leads to a reinvented Copyright Board 3.0.
At any rate, happy
anniversary to the Copyright Board 2.0 of Canada. We hope that its good
traditions and positive accomplishments can carry on to a new and improved Copyright
Board 3.0 – and that Version 3.0 is launched sooner rather than later.
HPK
