The Federal Court of Appeal Makes its Making Available Judgment Available: It’s Not Just About “The Vibe”

(HT Gib Van Ert)

The FCA has now released two important companion judgments regarding the Copyright Board’s 2017 tariff decision that involved the so-called “making available right”. Both judgments were penned by Stratas, J.A.

The first FCA decision is Entertainment Software Assoc. v. Society Composers, 2020 FCA 100 (CanLII), <http://canlii.ca/t/j82gg>  – the “making available judgment” – which quashed the Copyright Board’s 2017 decision that there is a new and separate “making available right” (“MAR”) that can be monetized as such as a tariff (the “Board MAR decision”)

The second FCA decision is CMRRA-SODRAC Inc. v. Apple Canada Inc., 2020 FCA 101 (CanLII), <http://canlii.ca/t/j82gf>, which upheld that Board’s related 2017 decision that ‘evidence before it was inadequate to warrant the setting of tariff for “making available" (the “Board rate decision”).

On the first issue regarding the making available right, the FCA quashed the Board’s decision in a judgment that is perhaps the most blunt, scolding, scathing, sweeping, and almost even sarcastic appellate rebuke that I have ever seen of any tribunal and certainly of the Copyright Board – with one possible other contender mentioned below, with an interesting common denominator. We see use of such language as “unacceptable”, “skewed”, “fatal loss of confidence…”, “misapprehension”,  and repeated use of the word “misuse[s]”.

While the result is anything but surprising, the frankness of the language from this normally very staid and rhetorically restrained Court is indeed very notable and remarkable and should be taken very seriously not only by today’s Copyright Board (which is composed of different members than those who wrote the 2017 decision) but by those bureaucrats and Ministers who enable and fund it.

Both of these decisions comment at length about the possible implications of the Supreme Court of Canada (“SCC”) decision in Vavilov for the Copyright Board. I’ll leave that mostly for another day. However, it should be noted that that the Board’s “correctness” niche carved out by the Supreme Court of Canada (“SCC”) pre-Vavilov wherein some issues arise both in tariff hearings and in infringement proceedings in the superior Courts may one day now be revisited as to whether this is still “good law”. In any event, those comments of Stratas, J.A. were obiter dicta. The FCA reviewed both decisions on the lenient and more deferential standard of “reasonableness” ((i.e. not “egregious or irrational” – Board Rate decision, para. 6). The Board won the battle on rate setting but lost the war on statutory interpretation and its “misuse” (paras. 76, 77 and 93)  of international law and its “misunderstanding of the relationship between Canadian domestic law and international law.” (para. 75)

The FCA upheld the Board on the rate setting issue, affirming the Board’s “relatively unconstrained” power to set rates and indicating that “in setting rates, the Board has just about the widest discretion known to law” (para 12 of the rate decision). That is not particularly remarkable or surprising – since the real raison d'être of the Board has historically been and mainly should be about rate setting and number crunching which requires sometimes lots of evidence and which justifies some time and effort – though not the 7 – 9+ years that seems now to have become the new normal for any contested file – or in the case of the Access Copyright post-secondary tariff – even an effectively uncontested one. Don’t get me started again on the extreme retroactivity of Board tariffs – something about which the SCC has explicitly expressed concern.

The Copyright Board has been ill-equipped to deal with any serious legal issues that entail jurisdictional or other essentially legal matters . Unlike the Competition Tribunal, where “questions of law shall be determined only by the judicial members sitting in those proceedings”, the Board has never had such a requirement and can sit even in the absence of its Chair, who is required to be sitting or retired judge.  That said, there has never been a Chair of the Board who hit the ground running with copyright law expertise. Even the most recent Board Chair – Justice Robert Blair – who as of today appears either to have retired or hasn’t yet been reappointed following the expiration of his first term on May 27, 2020 – has explicitly commented in 2018 on Board expertise in his only published remarks to date that such expertise is more likely to come from the Federal Courts and that the Board, at that time, didn’t even have a member with economic expertise:

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.

At any rate, I can and probably need do little more at this time than excerpt (with highlight, emphasis and some brief comment added) some of the more interesting and trenchant excerpts from Stratas, J.A.’s decision in the FCA’s making available judgement:

[3] After SOCAN had filed its proposed tariffs, the Copyright Act was amended: Copyright Modernization Act, S.C. 2012, c. 20. A new subsection, subsection 2.4(1.1), sometimes called the “making available provision”, was added to the Copyright Act. It reads as follows:

For the purposes of this Act, communication of a work or other subject-matter to the public by telecommunication includes making it available to the public by telecommunication in a way that allows a member of the public to have access to it from a place and at a time individually chosen by that member of the public.

[4] This raised the question whether the mere making available of a work on a server for the purpose of later streaming or download by the public was an event for which a tariff was payable.

[5]  A few days after the addition of subsection 2.4(1.1) to the Act, the Supreme Court released an important decision that interpreted the phrase “communicate the work to the public by telecommunication”: Entertainment Software Association v. Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 34, [2012] 2 S.C.R. 231. It held that the transmission over the Internet of a musical work that results in a download of that work is not a communication by telecommunication: see also Rogers Communications Inc. v. Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 35, [2012] 2 S.C.R. 283 at para. 2. Following that decision, SOCAN could not collect royalties for such downloads.

The Board took what should have been a very simple exercise in statutory interpretation and spun it into a lengthy apparently multimillion-dollar orgy of legal and international “expert”  fees and evidence  about the 1996 WIPO treaties. Here is the Board’s 2017 decision – released about five years after this matter first arose and after more than three years of deliberation.  

The Board did not need all this evidence. The legal issue about whether the 2012 legislation created a new distinct right that could be monetized into a tariff was quite simple not only in hindsight – but at the time, as some including Prof. Katz pointed out. If the Board was worried that this was over its head, or in any case, it could have and maybe should have dealt with this issue very simply by seeking a reference to the FCA – a procedure suggested by Prof. Katz in the Access Copyright tariff – but rejected with apparent hostility by the Board. Or, it could have simply ruled quickly by itself and let the parties bring judicial review proceedings.

The Board summarized its 2017 decision as follows:

[12] As will be made clear from the reasons that follow, subsection 2.4(1.1) of the Act deems the act of placing a work or other subject-matter on a server of a telecommunication network in a way that a request from a member of the public triggers the transmission of that work or subject-matter, including in the form of a stream or download, whether or not such a request ever takes place, to be a communication to the public by telecommunication.

In its August 25, 2017 Fact Sheet, the Board states:

Does this decision set a royalty for the making available of works to the public by telecommunication?

The protection of the making available of works to the public by telecommunication in a way that allows a member of the public to have access to it from a place and at a time individually chosen by that member of the public only came into force on November 7, 2012. Furthermore, there was insufficient usable evidence adduced by the Parties for the Board to be able to price the act of making available distinct from other acts of communication by telecommunication, or how to adjust the price for communication by telecommunication to account for its broadening in scope. However, this does not mean that the Board cannot do so in future matters.

Back to the FCA:

[49]  Nowhere did the Board explicitly say that it had a desired result in mind and that it was going to interpret subsection 2.4(1.1) in a manner to get that result. But looking at the reasons as a whole, whether it intended to do so or not, that is exactly what the Board did: it skewed its analysis in favour of one particular result.  

[50]  Two general features of unacceptability are evident in the Board’s reasons:

(1) Unacceptable legislative interpretation. The Board did set out the accepted method of interpreting legislation and the need to look at the text, context and purpose of legislation: at para. 95. But the analysis that follows leaves out important elements, particularly contextual elements such as the Supreme Court’s decision in Entertainment Software Association. And, along the way, the Board made some leaps of reasoning that cannot be justified. These fundamental defects result in a fatal loss of confidence in the Board’s interpretation of subsection 2.4(1.1).

(2) Misapprehension of the interrelationship between international law and domestic law. One element of the legislative purpose and context behind subsection 2.4(1.1), indeed an important element, is article 8 of the Treaty. But the Board went beyond seeing it as just an element: it developed its own robust view of article 8, offering nothing in support, and forced subsection 2.4(1.1), a provision in domestic legislation, to fit its view, calling subsection 2.4(1.1) a “deeming provision”. In so doing, the Board acted contrary to binding jurisprudence that limits the ways in which international law can influence the interpretation of domestic law.

...

[74]  Just because Canadian domestic legislation is enacted against the backdrop of a treaty that Canada has signed and just because the preamble to legislation, as here, suggests that it is aimed at implementing a treaty, it cannot be assumed that Parliament has adopted the treaty wholesale, no more and no less. Parliament, in fact, may have whittled down the provisions of the treaty or may have extended them. Indeed, it may have done something completely different.

[75]  The Board’s decision and many of the submissions supporting it suffer from a misunderstanding of the relationship between Canadian domestic law and international law.

[76]  When developing a legal argument, some members of the legal academy, the Bar, administrative decision-makers and the judiciary invoke international law—or sometimes just the vibe of it—because they see it as always relevant, persuasive and binding. Others see it as a make-weight, hoping to sway the impressionable with its grand provenance and sometimes broad acceptance. Still others see it as a supply of preferred values and ideological standards, handy ammunition to fire in support of a cause. In a courtroom ruled by doctrine, these are misuses of international law.  

[77]  Too often these days, we see these misuses. International law enters legal debates before courts and administrative decision-makers only in specific, defined ways that are consistent with settled doctrine and our constitutional framework: Gitxaala Nation v. Canada, 2015 FCA 73.

...

 [93]  In this case, in essence, the Board went to article 8 of the Treaty, asserted its view of that article’s meaning without any supporting reasoning, and then made subsection 2.4(1.1) conform to its view. This is not a legally acceptable methodology. This is a misuse of international law. The Board exalted international law over domestic law. In so doing, it violated the constraints imposed by binding case law and fundamental principle.

[94]  Overall, for the foregoing reasons, there is no basis for the Board’s interpretation of subsection 2.4(1.1). It cannot stand.

Déjà vu all over again?

Retired Justice William Vancise was the Chair of the Copyright Board from 2004 to 2014 and was the presiding member for the decisions in question that were rendered in 2017, more than three years after his retirement from the Board on May 13, 2014. The Board is very unusual in allowing this kind of long delay without a cut off date. The legislation does not preclude it and the Board clearly permits and indeed seems to encourage it. The norm in the judicial system for a retired judge to deliver a judgment after retirement is six months.

The current situation is not the first time where the Board has apparently started  out with a “desired result’’ and then tries to go about justifying it. One can look at the earlier ill-fated attempt to impose a “iPod tax” on devices when the FCA had said only three years or so earlier that it couldn’t do so on the memory embedded in such devices. The same Chairman Vancise was publicly perturbed about his rebuff from the FCA (Apple Canada Inc. v. Canadian Private Copying Collective, 2008 FCA 9 (CanLII), <http://canlii.ca/t/1vcx1>  and openly criticized it and its Justice Marc Noël (who was appointed Chief Justice of the Federal Court of Appeal, October 9, 2014) by name in what many might regard as an inappropriate speech delivered for a still active Chair of the Copyright Board in 2009 that he gave on August 11, 2009 shortly after he was reappointed for a second five year term in May of 2009.

Chairman Vancise had some trenchant comments about the SCC and the FCA. On the latter, he was particularly upset about its “six turgid paragraphs” that overturned his attempt to impose a “tax” on iPods on other similar devices that had been clearly rejected just a few years earlier:

The Supreme Court is not the only court attempting to fill perceived gaps in the Copyright Act. The Federal Court of Appeal has attempted on at least two occasions to reconcile the wording of the Act with the contemporary reality (means of consuming protected works or objects of copyright).

In 2004, the Court ruled the Board was wrong to conclude that the permanently embedded or non-removable memory, incorporated into a digital audio recorder or the device itself, was “an audio recording medium ordinarily used by individuals to copy music”.

In 2007, CPCC tried again and the Board was asked to determine whether the recorder itself was a recording medium as defined in the Act. It said yes in a long and well reasoned decision. The Federal Court of Appeal, once again on judicial review, overturned the Board. This time, the Court in six turgid paragraphs found its decision of 2004 dealt with the matter and was binding on the Board. I still wonder how the Federal Court of Appeal came to that conclusion when the question of whether the device itself was subject to a levy had not even been an issue in the previous decision and the comments of Noel J.A. were obiter and contained in what can only be called a “throw away line.” A throw away line that has had extreme consequences, not the least of which is at least 10's of millions of dollars in royalties that have not been paid to authors, composers and performers and threatens to destroy the private copy regime.

(Full disclosure - I argued successfully against the Board’s rulings on behalf of the Retail Council of Canada in both of these instances at the FCA).

Justice William Vancise rendered  his last Board decision only on January 18, 2018 – almost four years after his retirement.

What Does This All Mean?

This decision comes only a few weeks after another very important FCA copyright decision in the Access Copyright v. York University case. I’ve written about this recently at great length. That was an appeal – in contrast to judicial review – of a decision from the Federal Court. But lest we forget, that litigation was mainly about whether about whether interim and indeed final approved tariffs from the Copyright Board are “mandatory”. The FCA said very clearly that they are not. The Copyright Board tried its best to suggest for the longest time that they were mandatory based upon the absurd “one copy of one work” theory.

So, even if the Board has “just about the widest discretion known to law” to set tariff rates, it appears that the Board lacks the power to make the tariffs in question here and in the York case mandatory – absent an unexpected surprise from the SCC or Parliament. And even if the Board’s rate calculations can survive almost any judicial review, nobody will pay any attention to its tariffs even if they are “reasonable” (in the Vavilov sense) but unreasonable in common sense or dollars and cents to users and not mandatory.  

That should give the Board an incentive to get things done promptly and satisfactorily from a users’ standpoint – otherwise nobody will “take the train” with its approved tariff (my analogy) if there are better and cheaper ways of getting there from here without recourse to a tariffed means of transportation. Nobody will use tariffs that are not attractive and not mandatory.  Eventually, Parliament will figure this out and the Board will have to be reinvented or eliminated.

Is the SCC On the Horizon?

Given the proximity in time of the making available judgments to the  Access Copyright judgment – and the common thread of Copyright Board tariffs, will we see the SCC once again take on more than one copyright case at once, as we saw in the 2012 great Canadian copyright “pentalogy”? Perhaps now a “duet” of decisions?

The big difference between this and the pentalogy situation is that four of the pentalogy cases involved some interesting, urgent and close issues that called out for the Court’s attention, and which were interrelated to some considerable extent – and the Board needed to be corrected in some important respects and indeed was. One of the decisions, Re:Sound v. Motion Picture Theatre Associations of Canada , 2012 SCC 38, was not close in any way and the mystery remains as to why leave to appeal was even granted, since everyone including the Board but somehow excluding Re:Sound and its counsel seemed to understand that the meaning of the word “excludes” does not include “includes”.

In the current situation, the FCA’s judgements on the mandatory tariff issue in the Access Copyright v. York case and the making available judgment would both seem to be “bullet proof” lengthy and detailed decisions by unanimous panels of the FCA and penned by very experienced appellate justices. That doesn’t mean that leave won’t be sought, given the amount of money potentially involved, or even granted in either case.  However, I will go on record to predict that it is very unlikely that the FCA will be reversed by the SCC at the end of the day in either of these cases.

Conclusion

The FCA has recently delivered two stunning, highly documented, extremely lucid and ultra important judgments involving Copyright Board tariffs that definitely teach and confirm some very essential lessons, which include:

• Tariffs such as those sought by Access Copyright and SOCAN are not mandatory for users. This is based upon nearly eight decades of SCC jurisprudence that in turn reaches back to at least 1894
• The Copyright Board has considerable scope to set rates – including a zero rate where there is insufficient evidence to justify a tariff. But deference by the FCA won’t make the tariffs acceptable to the public if the tariffs are not sensible and timely
• The Copyright Board needs to be mindful of basic principles of statutory interpretation, including the basic and obvious axiom that international law must not be misused so as to misconstrue domestic law 
• As attractive as the exercise may have been, and even by the generous standard of “reasonableness”, the Board was very unreasonable in its venture into the “vibe” of international law.

Whatever happens – or more likely does not happen – in the SCC, it is only a matter of time before Ministers focus on the apparently total lack of tangible evidence of progress in Copyright Board reform. The Board now has a lot more money, almost no visible sign of meaningful activity, and no evidence of any plans that will significantly make a difference. With due respect and tough love, I must reiterate that “revamping its website” and launching a Twitter account won’t help in any significant way with the underlying issues and problems. When Ministers get around to the Copyright Board, which is bound to happen even if overall copyright reform bogs down as it usually does, these recent decisions are bound to be on their minds.

HPK