Update on Access Copyright – The Demise of a Dubious Enterprise?

As I’ve said before in my February 23, 2024 blog,

In 2018, the Province of Alberta and dozens of K-12 school boards sued Access Copyright for a refund of $25 million they allegedly overpaid for Access Copyright licences for 2010, 2011 and 2012.

Access Copyright, on the other hand, has defended and  counterclaimed for a potentially much larger amount based upon subsequent Copyright Board tariffs.

The Plaintiffs (consisting of “the Ministries of Education of 10 Canadian provinces and territories (excluding British Columbia, Ontario and Québec) and each of the school boards in Ontario” achieved a massive victory in the litigation, as I’ve written. Access Copyright (“AC”) suffered a monumental loss.

AC has, not surprisingly, decided NOT TO APPEAL this decision – presumably because it was so clearly correct, extremely well reasoned, and very thorough at 121 pages. As I said in my previous blog, the decision would have been “ likely to be upheld in any appeal.” The very likely confirmation of its loss in the Federal Court of Appeal would have been even more devastating for AC, not to mention resulting further legal fees, costs, and accruing interest. Moreover, by not appealing, AC can resort more immediately to the old, although desperate and rarely successful, strategy of using a litigation loss to try to convince the Government that the legislation is broken and needs to be fixed.

As the  decision states at para. 36, the Plaintiffs were seeking $25,493,109.36 and succeeded in their  claim. AC’s counterclaim was totally dismissed. Given the considerable passage of time in this litigation, the nature of  the Plaintiffs’ claim, and the accrual of interest, I am estimating that AC is now on the hook for about $30,000,000. That sum represents about half of AC’s total assets of $59,964,000  and almost 50% more than its Net Assets, based upon its last published audited financial statements for 2022. Clearly, this result will have a major and conceivably even existential impact on AC’s operations and the viability of its business model.

The elephant in the room, of course, is the Supreme Court of Canada’s landmark decision on July 31, 2021 in York University v. Canadian Copyright Licensing Agency (“Access Copyright”), 2020 FCA 77 (CanLII), [2020] 3 FCR 515, <https://canlii.ca/t/j6lsb> which held that Copyright Board tariffs, such as those on which AC depended, are NOT mandatory. I made instrumental submissions in that case on behalf of CARL. This was preceded by the Court’s 2015 decision in Canadian Broadcasting Corp. v. SODRAC 2003 Inc., 2015 SCC 57 (CanLII), [2015] 3 SCR 615, <https://canlii.ca/t/gm8b0> in which  Professor Ariel Katz, Prof. David Lametti (as he then was in 2015) and I were very influential in the important result that helped to pave the way for the York decision.

As a result of the York decision, the Copyright Board can do nothing to rescue AC – absent a drastic revision of the Copyright Act that would undo decades of jurisprudence and be not only unwise but quite possibly even unconstitutional.

Sadly, the Copyright Board has a history of incongruously keeping at least one obsolete collective on life support. The Board has managed to keep the Canadian Private Copying Collective (“CPCC”) artificially alive based on a very different legislative mechanism, namely the de jure mandatory private copyright levy, which I, on behalf of the Retail Council of Canada, played a major role in managing to all but eliminate. When is the last time anyone you know bought a blank CD, much less used it to record music? The last publicly reported financial data from the CPCC is from 2017. So, the CPCC has had enough oxygen to pay its small staff,  lawyers, and lobbyists etc. enough to lobby for another day. Here's what they are currently  absurdly seeking in the Pre-Budget Consultations in Advance of Budget 2024:

The CPCC asks that the government amend the Copyright Act to make the private copying regime technologically neutral, requiring large technology companies to finally pay their fair share to copyright holders. The focus of these amendments would be to allow the regime to apply to both audio recording media and devices.

This would supposedly require “minimal revisions to the Copyright Act ” to “make it possible for the CPCC to ask the Copyright Board of Canada to approve a levy on the smartphones and tablets where Canadians now make their private copies”.  They say that these proposed changes will “reinstate a true marketplace solution.” A truly “marketplace solution” for private copying levies would be to see them disappear through repeal of Part VII of the Copyright Act. There are very few, if any, other comparable jurisdictions with comparable private copying regimes that provide comparable levies  and these notably do NOT include the USA, Australia or the UK. Hopefully, the Canadian Government will, upon reviewing the history of this levy and the previous absurd attempts by CPCC to impose it on other types of media and devices, will know how to say no – or better still, to just ignore the ridiculous request and repeal Part VII. The Federal Budget 2024 appears to have wisely ignored the CPCC’s absurd advocacy.

AC has already announced that it is downsizing and falsely blames its troubles on the 2012 legislation that added the word “education” to the fair dealing provisions. That legislation only confirmed the obvious and is totally consistent with several Supreme Court of Canada decisions. IMHO, as I’ve suggested many times, AC can only justify its continued existence if it can provide a valid license for a viable repertoire offering real value at a low enough price to attract the educational community. It should not be coddled with bad legislation or licensing deals with the Federal government that have arguably unnecessary and perhaps even “sweetheart” deals, such as the initial licences that was key to its launch in the 1980s and which apparently and inexplicably continues to date.  The royalty rate for 2016 to 2017 was $621,755.25 and has increased since then by the Consumer Price Index. The deal also includes Copibec, the Quebec counterpart to Access Copyright.

Now, just in time for Passover 2024, the Federal Budget 2024 does NOT accede to Access Copyright’s perennial, incessant, and misleading whining about trying to eviscerate fair dealing rights for educators and others. It bears frequent repetition that Canadian fair dealing rights for users – as spelled out in the statute and upheld consistently by the Supreme Court of Canada – stop far short of what the American’s have provided for users’ fair use rights since 1976 in 17 USC 107.  OTOH, Budget 2024 does include a potentially positive copyright item “to allow the circumvention of digital locks to diagnose, maintain, or repair a product. This will enable consumers to repair their devices where they choose.”

 We shall watch with interest the potential demise of unnecessary, dubious, and obsolete copyright collectives facing existential challenges and which serve nobody’s interest beyond the lawyers, lobbyists, and executives that persist in prolonging their inevitable demise.