“Veni, vidi, vici”: Julius Caesar, 47 BC
The more than ten-year-old effort by Access Copyright (“AC”) to impose a “mandatory tariff” through the Copyright Board on Canadian educational institutions is over in a quick, decisive, and devastating unanimous judgment from Justice Rosalie Abella of the Supreme Court of Canada (“SCC”). 85 years of legislative policy and SCC jurisprudence are re-affirmed, vindicated, and continued. No rational and competent Cabinet of any political stripe should even think about trying to overturn this result.
The Court held that:
- AC’s tariff as approved by the Copyright Board is not mandatory for users
- It is unnecessary and inappropriate to issue a declaration about fair dealing in these circumstances
- Nonetheless, there were serious errors in the Courts below noted concerning their pronouncements about fair dealing, e.g. re “aggregate” copying.
The Court also provided additional guidance on how guidelines can “actualize” fair dealing rights and provided useful guidance for the educational sector to move on – without the need to seek gratuitous and inappropriate declarations from Courts.
These three main aspects of the Court’s judgment reflect the intervention of my client, the Canadian Association of Research Libraries (“CARL”). I can proudly say that our arguments were clearly very influential and, apparently, even determinative. The other clearly influential intervention that helped to carry the day was from my friend and colleague Prof. Ariel Katz and the Author’s Alliance, who showed that Access Copyright by no means represents the interests of all authors and certainly not the interests of most of the authors whose works are actually used in Canadian universities. Other interveners also provided useful contributions, e.g. Universities Canada and the Canadian Association of University Teachers.
Justice Rosalie Abella heard the AC v. York & York v. AC case on May 31, 2021 as her last case before her retirement from the SCC on July 1, 2021. Her unanimous and unusually prompt yet extremely detailed and substantial judgment was rendered on July 30, 2021 – just ten weeks after the SCC heard this case, which was technically two appeals and which included 17 interveners. This remarkable judgment summarizes the consistent policy and jurisprudence of Canadian copyright law on collective administration and fair dealing since 1936. This landmark judgement will crown her luminous and lasting jurisprudential legacy built upon her previous important judgments in copyright and so many other areas. This may well prove to be the most important copyright judgment to date in Canada.
From a purely practical bottom-line standpoint, if the decision had gone the other way, Canadian universities could have been on the hook for hundreds of millions of dollars or more for retroactive and prospective payments that would be been a windfall to AC and a disaster for higher education and innovation. Not to mention much more litigation and potentially one or more further trips to the SCC. We now have litigation closure on this for the foreseeable future – but the lobbying to undo this result has already begun.
Prof. Katz was also the author of the two “Spectre” papers that were so influential in the Court’s reasoning and are cited several times. He and Prof. David Lametti, as he then was, before he became a Member of Parliament and then Minister of Justice, were my colleagues, co-counsel and clients in an intervention in the immediate forerunner to the current SCC decision, namely, the case of Canadian Broadcasting Corp. v. SODRAC 2003 Inc., 2015 SCC 57 (CanLII),  3 SCR 615, <https://canlii.ca/t/gm8b0> (“CBC v. SORRAC”) decided in the SCC just six years ago by now retired Justice Marshall Rothstein. See paras. 101 to 113 which held, based upon our intervention, that:
 I find that licences fixed by the Board do not have mandatory binding force over a user; the Board has the statutory authority to fix the terms of licences pursuant to s. 70.2, but a user retains the ability to decide whether to become a licensee and operate pursuant to that licence, or to decline.
The Simplified History of this Litigation
Most of the immensely long and convoluted history of this litigation and the Copyright Board proceeding, which concluded more than nine years after it began and was mostly unopposed, has been discussed, sometimes very critically, on my and Ariel Katz’ blogs. Here are some key points:
- AC obtained an “Interim Tariff” from the Copyright Board just in time for Christmas on December 23, 2010. Universities Canada (then AUCC) did nothing to get this interim tariff judicially reviewed, although that would arguably have been a viable possibility at the time. AUCC instead launched a predictably unsuccessful attempt to force the Board to issue transactional licenses. AUCC was represented by the Osler law firm, which subsequently represented York in the litigation and which was responsible for the Fair Dealing Guidelines involved in this litigation. Osler’s has also represented Re:Sound, the second largest collective in terms of earnings in Canada. Re:Sound represents the major record companies – dominated overwhelmingly by three American giants. Back in the 1990’s, Osler had also represented Access Copyright, or CanCopy as it was then called.
- AC sued York in 2013. York did nothing to try to stop the litigation in a summary manner (e.g. on the basis that that the tariff is not mandatory, AC lacks standing, no cause of action, etc.) and instead launched a counterclaim based on the claim that anything copied within the scope of its fair dealing guidelines was fair game. These guidelines had been developed by Osler’s and AUCC.
- AUCC withdrew from the Copyright Board proceedings in 2012 concerning the Post-Secondary tariff in 2004 – presumably having exhausted its budget for the Board proceedings and agreed to a controversial Model Licence deal that very few Universities went along with.
- In the 2015 CBC v. SODRAC case, Prof. Ariel Katz, Prof. David Lametti, as the then was, and I as counsel persuaded Justice Rothstein and the rest of the Supreme Court by way of intervention that tariffs in the voluntary so-called “arbitration” regime of the Copyright Board weren’t mandatory. If tariffs under the voluntary regime weren’t mandatory, a fortiori then why should tariffs be mandatory under non-voluntary and immensely expensive “in rem” proceedings that AC was pursing at the Board? However, AC was simply in denial of this result and York was barely cognizant of it until much later.
- The AC v. York litigation continued at immense expense culminating in a three-week trial in 2016 and a very controversial judgment by Phelan, J. of the Federal Court in 2017. See Canadian Copyright Licensing Agency v. York University, 2017 FC 669 (CanLII),  2 FCR 43, <https://canlii.ca/t/h4s07> During that proceeding, York focussed only on whether the “interim” tariff was mandatory and suggested for some reason that the CBC v. SODRAC judgment was merely “instructive” and that it was not necessary to consider whether final approved tariffs were mandatory – even though the trial judge himself had questioned whether this could resolve the whole case. The result was discussed in a very frank, important and widely read blog by Ariel Katz entitled Access Copyright v. York University: An Anatomy of a Predictable But Avoidable Loss
- Anyway, York kept the mandatory tariff issue alive on appeal, although it still focussed mostly on the fair dealing counterclaim.
- In the Federal Court of Appeal (“FCA”), Justice Pelletier got the mandatory tariff issue absolutely right – mainly by relying on Ariel Katz’s Spectre I paper that York had thankfully cited. See York University v. Canadian Copyright Licensing Agency, 2020 FCA 77 (CanLII), <https://canlii.ca/t/j6lsb>
- In the SCC, York finally fully engaged on the mandatory tariff issue with an very good factum in response to York’s appeal of the mandatory tariff ruling from the FCA. AC dismissed the CBC v. SODRAC judgement as a one-page afterthought in its appeal factum on the mandatory tariff.
- York also brought in the well-known barrister Guy Pratte for the oral argument. He is one of the last of the breed of all around appellate barristers who can advocate just about any case and come quickly up to speed on every detail. His performance was excellent and should be watched by anyone who aspires to appear at the SCC. He was extremely clear and in command. And he knew every detail and could answer every question complete with page or paragraph reference without hesitation or having to shuffle papers around.
Key findings in the Judgment In Justice Abella’s own words:
Justice Abella’s judgment is a monument of lucidity, thoroughness and readability. It is a “must read” in its entirety for anyone interested in Canadian copyright law. However, for readers convenience, I take the liberty of including the following key quotes from Justice Abella’s judgment (with highlight added):
 For the following reasons, I agree with the Federal Court of Appeal that the tariff is not enforceable against York University. But I would not grant York’s requested Declaration, nor endorse the fair dealing analysis conducted by the Federal Court and the Federal Court of Appeal.
 Access Copyright argued in the alternative that pursuant to s. 68.2(1) Board approved royalties operate as a remedy for infringement against a user who has not accepted a licence. But there is nothing in the legislation to suggest that Parliament intended that Board approved tariffs operate as pre-determined infringement damages. Parliament is well aware of how to create a statutory damages scheme. It did so in s. 38.1, which was enacted in 1997 at the same time as key collective administration amendments. Section 68.2(1) could not have been meant to silently create a second statutory damages scheme, where “amounts are predetermined by the Board, and then imposed without regard to the actual circumstances of the case and without any proportionality to either the user’s behaviour or copyright owners’ actual damage” (“Spectre II”, at p. 58).
 This was consistent with the purpose of the regime, enacted as Parliament became “aware of the necessity of regulating the exercise of the power acquired by” performing rights societies (Vigneux (1943), at p. 352, per Duff C.J.). It would be discordant with this purpose to empower a society to foist a licence on an unwilling user.
 But a collective society’s market power and effectiveness at achieving its goals is not guaranteed by the Copyright Act. Nothing in the Act is designed to prop-up collectives that have become less valuable to users and/or rights-holders. As Professor Daniel J. Gervais explains:
. . . Canadian rightsholders may create a new Collective Management Organization if they are dissatisfied with an existing one. In fact, users themselves could do the same, as was suggested by a well-known author in the area of reprography. [Emphasis in original.]
(“Collective Management of Copyright and Neighbouring Rights in Canada: An International Perspective” (2002), 1 C.J.L.T. 21, at p. 26; see also Department of Canadian Heritage, Collective Management of Copyright and Neighbouring Rights in Canada: An International Perspective (2001), at p. 26; Howard P. Knopf, “Copyright Collectivity in the Canadian Academic Community: An Alternative to the Status Quo?” (1999), 14 I.P.J. 109.)
 If a collective society does not have a large enough repertoire or other sources emerge to provide better value, users may find that the collective is not “the most cost-effective way to obtain licences”, and might prefer to “negotiate with the right-holders directly, or through other intermediaries” (“Spectre I”, at p. 159).
 Operating together, these price-setting powers of the Board protect users from the potential exertion of unfair market power by collective societies. This was clearly the purpose of the 1936 amendments empowering the Copyright Appeal Board to approve statements of royalties. Government reports and legislative history show that this purpose persisted through the 1988 and 1997 amendments.
 The legal consequence of Access Copyright’s mandatory tariff theory would be that a user would be liable to pay royalties in full as soon as it became responsible for any infringing use of a work within a collective society’s repertoire. Under the final 2011-2014 Access Copyright tariff for post-secondary educational institutions, for example, York would be liable to pay $24.80 for each of its 45,000 full time equivalent students, totalling over one million dollars per year, as soon as it made a single infringing use within Access Copyright’s repertoire. For a university that attempts to clear its copyright obligations using alternative licences and fair dealing, a single infringing use — one that was not authorized by fair dealing or independently licensed — could thereby become a tripwire making the university liable to pay the full royalties in a tariff. This “Sword of Damocles”, as the intervener the Canadian Association of Research Libraries aptly put it, renders a university’s freedom to clear its copyright obligations without involving Access Copyright completely illusory.
 The source of Access Copyright’s grievance, it seems to me, stems not so much from the voluntary nature of an approved tariff, but from the fact that Access Copyright cannot initiate infringement actions on behalf of its members. To the extent that this is a problem, it has nothing to do with s. 68.2(1) and is largely outside the scope of this appeal. But it is important to recall that Access Copyright chooses to operate on the terms of a non-exclusive licence that does not give it the right to sue for infringement in respect of the rights it administers. Nothing compels Access Copyright and its members to operate this way.
 It is of course open to Parliament to amend the Copyright Act if and when it sees fit to make collective infringement actions more readily available. But under the existing relevant legislation in this appeal, an approved tariff is not binding against a user who does not accept a licence.
 I would therefore dismiss Access Copyright’s appeal. This brings us to York’s appeal from the dismissal of its counterclaim seeking declaratory relief.
 York’s appeal to this Court seeks the Declaration from this Court that was denied by the Federal Court and the Federal Court of Appeal.
 In my view, it is not appropriate to entertain York’s request for declaratory relief in these proceedings. This Court recently stated the test for when declaratory relief may be granted in Daniels v. Canada (Indian Affairs and Northern Development),  1 S.C.R. 99, per Abella J.:
The party seeking relief must establish that the court has jurisdiction to hear the issue, that the question is real and not theoretical, and that the party raising the issue has a genuine interest in its resolution. A declaration can only be granted if it will have practical utility, that is, if it will settle a “live controversy” between the parties. [Citation omitted; para. 11.]…
 There is no doubt, as York argued, that guidelines are important to an educational institution’s ability to actualize fair dealing for its students. As Professor Samuel E. Trosow writes, a “general lack of understanding about basic copyright rights and obligations” serves as a “serious impedimen[t] . . . to the realization of fair dealing as a substantive users’ right” in the educational context (“Bill C-32 and the Educational Sector: Overcoming Impediments to Fair Dealing”, in Michael Geist, ed., From “Radical Extremism” to “Balanced Copyright”: Canadian Copyright and the Digital Agenda (2010), 541, at p. 542). Institutionalized guidelines can help overcome this impediment.
 But the usefulness of guidelines in theory does not provide the Court with a sound basis for entertaining declaratory relief without a live dispute between the parties or when those whose rights are at stake are not privy to the proceedings.
 While I therefore agree that the requested Declaration should not be granted, this should not be construed as endorsing the reasoning of the Federal Court and Federal Court of Appeal on the fair dealing issue. There are some significant jurisprudential problems with those aspects of their judgments that warrant comment.
 In commenting on those errors, it is important to emphasize that our reasons do not decide the issue of fair dealing, which can only be determined in a factual context. Rather, the objective is to correct some aspects of the reasoning from the courts under review which, respectfully, depart from this Court’s jurisprudence. While correcting the errors committed by the Federal Court and Court of Appeal favours the position argued before this Court by York, these reasons address only some of the factors that make up the fair dealing analysis, an analysis that requires consideration of facts and factors not addressed here.
 The main problem with their analysis was that they approached the fairness analysis exclusively from the institutional perspective. This error tainted their analysis of several fairness factors. By anchoring the analysis in the institutional nature of the copying and York’s purported commercial purpose, the nature of fair dealing as a user’s right was overlooked and the fairness assessment was over before it began.
 In other words, contrary to the Federal Court of Appeal’s view, in the educational context it is not only the institutional perspective that matters. When teaching staff at a university make copies for their students’ education, they are not “hid[ing] behind the shield of the user’s allowable purpose in order to engage in a separate purpose that tends to make the dealing unfair”.
 It was therefore an error for the Court of Appeal, in addressing the purpose of the dealing, to hold that it is only the “institution’s perspective that matters” and that York’s financial purpose was a “clear indication of unfairness” (paras. 238 and 241). Funds “saved” by proper exercise of the fair dealing right go to the University’s core objective of education, not to some ulterior commercial purpose (see Lisa Macklem and Samuel Trosow, “Fair Dealing, Online Teaching and Technological Neutrality: Lessons From the COVID-19 Crisis” (2020), 32 I.P.J. 215, at p. 238). The purpose of copying conducted by university teachers for student use is for the student’s education. But in every case, all relevant facts must be taken into account in order to determine the fairness of the dealing.
 And the trial judge’s criticism of York’s Guidelines on the basis that different portions of a single work could be distributed to different students, such that an author’s entire work could end up being distributed in the aggregate, is also contradicted by SOCAN, which held that “[s]ince fair dealing is a ‘user’s’ right, the ‘amount of the dealing’ factor should be assessed based on the individual use, not the amount of the dealing in the aggregate” (para. 41; see also Alberta (Education), at para. 29).
 And while it is true that “aggregate dissemination” is “considered under the ‘character of the dealing’ factor” (SOCAN, at para. 42; see also CCH, at para. 55; Alberta (Education), at para. 29), as this Court cautioned in SOCAN, “large-scale organized dealings” are not “inherently unfair” (para. 43). In SOCAN, where copies could easily be distributed across the internet in large numbers, this Court warned that focussing on the “aggregate” amount of dealing could “lead to disproportionate findings of unfairness when compared with non-digital works” (para. 43). By extension, the character of the dealing factor must be carefully applied in the university context, where dealings conducted by larger universities on behalf of their students could lead to findings of unfairness when compared to smaller universities. This would be discordant with the nature of fair dealing as a user’s right.
 At the end of the day, the question in a case involving a university’s fair dealing practices is whether those practices actualize the students’ right to receive course material for educational purposes in a fair manner, consistent with the underlying balance between users’ rights and creators’ rights in the Act. Since we are not deciding the merits of the fair dealing appeal brought by York, there is no reason to answer the question in this case.
 In light of these reasons, I would dismiss York’s appeal from the dismissal of its counterclaim but, in the circumstances, without costs.
 I would dismiss Access Copyright’s appeal with costs.
En passant, it’s interesting that AC’s appeal was dismissed with costs and York’s was dismissed without costs. That may signify a degree of sympathy with York’s position on fair dealing. Taxed costs in the SCC are not significant compared to lower courts. However, it will be very interesting to find out – if we ever do – how the costs below, which must be at least in the significant seven figures on each side – are now ultimately dealt with. AC got costs both for its action and for York’s failed counterclaim at trial. The FCA awarded costs for York on its appeal of the mandatory tariff issue but against it on the fair dealing issue. The final result may be a wash overall. That would leave both sides having to eat their own costs, which are likely to be huge. Clearly, any fight over costs below is bound to be complex, lengthy and expensive.
Implications for Collectives Going Forward
If this decision had gone the other way on the mandatory tariff issue, the result would have been years more very expensive litigation and a potential retroactive cost of hundreds of million of dollars or more to Canadian universities – not to mention future costs of far more.
Professors Katz and Lametti (as he then was) and I succeed in putting the issue of whether the Copyright Board can award retroactive tariffs clearly on the SCC’s radar screen. See FN 2 of the CBC v. SODRAC judgment.
Access Copyright does not perform any clearly necessary or even useful service. Its distribution to average writers is probably less than $100 a year on average. I know this because I’m a member and I get more than some other even more prolific authors who I know. Very few actual creators make very much, as former Dean Martin Friedland documented in the heyday of AC in 2007. At that time, the maximum creator affiliate payout was $7,356 and this tapered off very rapidly after that. And that’s from before the current litigation began and the Copyright Act was amended to include “education” in s. 29. The Author’s Alliance showed what we all knew – that AC does not represent the vast majority of academic authors whose works are used at Canadian universities. Very few Canadian university students will ever be assigned anything from Margaret Atwood or Alice Munro. AC exists mainly to keep its executives, staff and lawyers busy and very well paid. It has very little useful repertoire for the post secondary sector, is happy to charge for transactional licenses to use public domain material, and has never had any serious methodology in its basic distribution. “Payback” for those who have actually published written material may be slightly more methodical – but not in any obvious way.
The demise of AC’s mandatory tariff myth may hurt or even prove fatal to AC. Its revenues have been in deep decline in recent years – not a result of the 2012 legislation clarifying that “education” is a recognized purpose of fair deal – but as a result of the fact that it is basically selling little or nothing for a lot of money.
There is major litigation pending over the recovery by way of refund, damages, or restitution on many millions of dollars paid by K-12 school boards on the basis of their claim that tariffs are not mandatory.
Of course, nothing prevents AC from actually offering a useful license to a useful repertoire at a reasonable price – say $5 a year or less per FTE – which I’ve been suggesting for years. That price should now be greatly discounted in view of this incredibly decisive decision. But AC lacks the repertoire and lacks the credibility to go down this road. I offered a vision 21 years ago for an alternative collective that was cited in the SCC judgment.
But, we can rest assured that AC is predictably going to whine about “telling our stories” and make up or at least suspiciously spin lots of supposed facts and figures in order to lobby Ministers to change the law to make tariffs mandatory. The educational sector narrowly dodged such a bullet when an attempt by ISED bureaucrats to effectively make tariffs mandatory under the guise of harmonizing statutory damages was stopped after an earful of negative reaction from the educational sector.
Nobody should listen to AC’s lobbying. They are the enemies of innovation in the educational system in Canada. Our post secondary institutions, with the leadership of my client CARL and others, have adapted very well without them and do a great job at showing the post secondary community how to balance, implement & "actualize" the rights & responsibilities of authors, publishers, faculty, students and administrators. AC is nothing but a deadweight loss to the system. AC’s whining about the including of the word “education” as a purpose of fair dealing in 2012 is nothing but fake news. This amendment simply clarified the clearly existing state of the law. The subsequent decline in AC revenues is the result of its alienation of the educational sector and the evolution of how material is used and paid for, when required, in the educational sector.
The judgment will likely have little or no short-term effect on SOCAN – which actually does have copyright rights – and whose tariffs are, in any event, “de facto” mandatory for any user who wants to use modern repertoire and not just Bach and Mozart. The equitable remuneration regime run by Re:Sound is also probably de facto mandatory for most users of recorded music, as is the retransmission regime. In all three of these situations, there is currently no other practical way to clear rights, if needed, other than to deal with the collectives. However, in the long term, users in these situations may feel empowered to consider whether their bargaining power may now have increased. Moreover, if there is reason to doubt the de jure mandatory nature of these tariffs, other new collectives may begin to feel empowered and there could be more competition. Stay tuned.
The decision may affect some other arguably nuisance collectives and tariffs, such as the media monitoring tariff recently rubber stamped and imposed yet again by the Board after more than two years of unopposed rumination, apparently without even raising the issue of fair dealing – which seems like an obvious issue in media monitoring. However, the prohibitive costs and usually absurd and invasive interrogatory process of Board proceedings, have discouraged any opposition of the tariff over the years. Some may now wish to consider whether it is indeed legally mandatory.
It won’t affect the private copying levy, which is indeed mandatory because the legislation is clear. It is, in fact, the “only” tariff that is clearly mandatory – because it is a “levy” and the language is clear. We made this point to the SCC. The Board has shamefully kept this collective on life support for years for no cogent reason – apparently so that it can live to fight another day, as it recently has signalled it might do and in view of possible sympathy from the current crew of some senior bureaucrats and certain Ministers.
The Good News Going Forward
The post-secondary sector in Canada can exhale and enjoy the rest of the summer and have less anxiety about planning curricula that include material that meets the established tests for fair dealing.
It’s probably a good idea for all post-secondary – and indeed K-12 – institutions to think about updating their fair dealing guidelines consistent with the teachings of the Court in this judgment in order to actualize the fair dealing rights of faculty and students. Whether this happens in a very coordinated way or more ad-hoc remains to be seen. However, the AUCC/Universities guidelines were not blessed as such by the Court and presumably should be updated. They were very problematic at the time and have not improved with age, especially with the massive roll-out of eBooks, OER, MOOCs, and the COVID crisis since then.
Although there is the theoretical possibility of class action copyright litigation against educational institutions in Canada, that is probably unlikely. Attempts along these lines in the USA in the Georgia State litigation have been by and large a legal and public relations disaster for the plaintiff publishers, led by no less than Cambridge University Press.
However, the post-secondary and K-12 sectors must plan and budget for the inevitable lobbying efforts of AC directed especially towards certain Ministers from Quebec, since any mention of copyright, culture and “telling our stories” is a regarded by some as a sure vote-getter in that province.
It will be very interesting to see what governments do regarding their own dealings with Access Copyright. The tariff for provincial governments was actually very low at the end of the day, although Ontario bears the embarrassment of having settled at an absurdly high cost in hindsight. There is no tariff for the Federal Government. Maybe it can finally move on from its sweetheart approach to AC that helped to launch it in the first place more than 30 years ago – and be more responsible for taxpayers’ money and the real encouragement of innovation.
Interventions can count. Although one can debate whether the Court should be hearing so many interventions but only allowing five minutes each for oral argument, the result is that most who have anything to say will be heard. It takes a long time to prepare a short five-minute argument – but one can be confident that it will be heard attentively.
At the risk of shameless self-promotion, it seems clear that our intervention on behalf of CARL along with that of Ariel Katz and particularly his two landmark Spectre papers were very influential and maybe even more determinative in this case than the submissions of the main parties.
Here are some convenient links:
Here’s the Supreme Court’s Cases in Brief summary:
Here’s the full decision:
The oral arguments are here. https://scc-csc.gc.ca/case-dossier/info/webcastview-webdiffusionvue-eng.aspx?cas=39222&id=2021/2021-05-21--39222&date=2021-05-21
CARL’s argument is at 3:37:56.
Here’s the link to all the factums:
Here's CARL's Press Release:
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